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 2 million subscribers in the second quarter, sent the stock down more than 20% in after-hours trading 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 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.

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.

“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 specializing 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.”

Christian added that Netflix’s singular focus on subscription acquisition may be its Achilles’ heel.

“Look at Disney,” Christian said. “It’s not only streaming but they have theatrical, they have theme parks, they have consumer products, they have ways to diversify, which gives them flexibility. That is huge. That is going to play a big part. Netflix is going to have to start looking at other things like that to diversify their revenue.”

Advertising

Also plaguing the service, say analysts, is a lack of must-see content.

While Netflix used to be the first stop for consumers, recent offerings like “Severance” from Apple TV, “The Dropout” on Hulu and “The Gilded Age” on HBO Max have prompted consumers to go where the hits are rather than stick with their first streaming subscription. According to a recent survey from Deloitte, subscriber churn in the United States is at 37%, with consumers canceling their services because of cost issues and lack of new content.

To Raj Shah, an analyst at the digital consultancy firm Publicis Sapient, this behavior wasn’t surprising. “One-off hits like ‘Bridgerton’ are not enough to keep subscribers hooked,” he said in an email. “It is going to need a string of well-timed, well-liked, must-see programming to attract and hold onto customers.”

The company lost 600,000 subscribers in the United States and Canada, which it attributed primarily to its most recent price increase. Asia was the one region that showed growth, with Japan, India and the Philippines among the countries adding subscribers.

The company made $1.6 billion in profit on $7.8 billion in first-quarter sales, a 10% increase in revenue compared with the same period last year.

Netflix, with 221.64 million subscribers, still has the largest subscriber base of all the streaming services, but the news puts it at well below the 2.5 million subscriber additions that Wall Street analysts had been expecting.