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It is the first time in more than a decade that the online entertainment company has admitted losing subscribers, and Netflix says that it expects to lose another 2 million subscribers in the second quarter.
Netflix announced that it now has 221.6m subscribers around the world, but had expected to gain an additional 2.5m subscribers in the first quarter rather than the dramatic loss it actually experienced.
During the same period last year the company added 3.98m paid users.
Netflix bosses said that suspending its streaming services in Russia following Vladimir Putin’s unprovoked attack on Ukraine resulted in a loss of 700,000 subscribers.
It also blamed password sharing, and competition from traditional entertainment companies that have launched their own streaming services.
Netflix says that its service is being used in more than 100m households through shared accounts, including 30m in the US and Canada.
“Our revenue growth has slowed considerably ... Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally,” the company wrote in a letter to shareholders.
“However, our relatively high household penetration — when including the large number of households sharing accounts — combined with competition, is creating revenue growth headwinds.”
The news caused the company’s shares to dip as much as 23 per cent in after hours trading.