For the first time in a decade, Netflix lost subscribers — 200,000 overall in the first three months of the year — the result of shifting economic forces, increasingly fierce competition from other streaming platforms and the conflict in Ukraine. The announcement, plus the company’s warning that it expected to lose two million subscribers in the second quarter, sent the stock down more than 20 percent in after-hours trading on Tuesday.

In a letter to shareholders, Netflix attributed its subscriber loss to a number of factors, including a slowdown in the adoption of broadband and smart TVs; password sharing among households; and increased competition from both traditional cable and broadcast TV and other emerging streaming services.

It also cited macroeconomic factors including increased inflation and Russia’s invasion of Ukraine, which prompted Netflix to shut down its service in Russia, reversing the modest subscriber growth in the European region by a loss of 700,000 Russian accounts. But a changing landscape in streaming may also be at play.

For years, Netflix was seen as the original disrupter in entertainment. Its emergence in the field prompted every major studio in Hollywood to adopt a streaming strategy to better compete with Netflix’s bingeable, no-advertising revolution.

Now with entrants like Disney+ and HBO Max sporting their own compelling services, the company may be forced to adopt some of the revenue streams that have made the traditional media companies successful for decades: theatrical distribution, advertising-supported subscription services and perhaps consumer products.

Reed Hastings, the co-chief executive of Netflix, who has long dismissed an advertising-supported tier, confirmed Tuesday during a taped interview with investors that his thinking had changed. “Those who have followed Netflix know that I’ve been against the complexity of advertising and a big fan of the simplicity of subscription,” he said.

But he added, “I’m a bigger fan of consumer choice and allowing consumers who would like to have a lower price and are advertising-tolerant get what they want.”

The about-face signals the company’s recognition that it must differentiate its revenue streams, including venturing into the gaming business. The company this week announced a new animated show and a mobile game around the in-person card game Exploding Kittens.

“Netflix, which was traditionally evaluated as a technology stock, is now starting to get valued as more of a traditional content provider,” said Jon Christian, a founder of OnPrem, a technology consulting firm specialising in media and entertainment.

“Yet they don’t have some of the advantages that some of the other major streaming providers have, like theatrical box office and sports programming.”

(New York Times News Service)