Netflix is having a Terrible, Horrible, No Good, Very Bad Day, announcing that it’s lost 200,000 paid subscribers in the first quarter—its first subscriber loss since 2011. Shares of the company quickly dived off a cliff, plunging more than 25 percent in after-hours trading.

Netflix Loses 200K Subscribers in Total Earnings Miss https://t.co/oi1qZ6XBnZ

— The Hollywood Reporter (@THR) April 19, 2022

Worse, the company is expecting a stunning two million subscriber loss for the second quarter.

They issued a letter to their shareholders Tuesday, writing:

Our revenue growth has slowed considerably as our results and forecast below show.

…However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds.

The interesting thing is that the company and analysts were both apparently caught completely off guard. CNBC reports:

Netflix previously told shareholders it expected to add 2.5 million net subscribers during the first quarter. Analysts had predicted that number would be closer to 2.7 million.

Oops. Perhaps they should have been reading RedState’s Brandon Morse, who saw this coming last June and wrote about the reasons why, including the winding down of the pandemic (which wound back up again that fall), the rise of competing streamers, and the company’s knack for getting into controversies. He wrote:

What isn’t going to help is that Netflix has also made it clear that it doesn’t really care how angry people get about the wokeness of a show. In fact, they consider backlash to be a good thing because it gets people talking about it.

The list of squabbles Netflix has gotten involved in is long, but it includes the Dave Chappelle comedy special brouhaha—from which Netflix notably didn’t shrink—the complaints that Cuties was sexualizing young girls, the charge that they were turning “up the wokeness to 11” in shows like “Vikings: Vallhalla,” the Kevin Spacey saga, and more.

Many people will now naturally ask, “What does this mean for me?” Well, if you’re a Netflix subscriber who shares their subscription, you may soon be in for a rude awakening. The company estimates that almost 100 million viewers regularly use borrowed passwords, and they’re planning to crack down on the practice. From their shareholder letter:

Another focus is how best to monetize sharing – the 100M+ households using another household’s account… So early last year we started testing different approaches to monetize sharing and, in March, introduced two new paid sharing features, where current members have the choice to pay for additional households… So while we won’t be able to monetize all of it right now, we believe it’s a large short- to mid-term opportunity.

Translation: We’re putting our foot down, people!

I’ll be honest—Netflix got me through the pandemic, especially the first year. Now, people are going out to dinner again instead of sitting in front of the tube, and the competition for eyeballs has heated up with the likes of Paramount+, Disney+, Peacock, and more. Netflix will surely survive, but they could be in for a tough ride for the near future.