Recently, Netflix experienced a significant spike in subscription cancellations, which has raised some eyebrows.
The catalyst? Co-founder Reed Hastings publicly backed Vice President Kamala Harris.
Hastings didn’t just show his support in words; he also dropped a hefty $7 million into Harris’s campaign, and the timing couldn’t have been worse for Netflix.
Cancellations on the Rise
According to research from Antenna, the cancellation rate—often referred to as “churn”—nearly tripled in the U.S. after Hastings’s endorsement on July 22.
Typically, Netflix enjoys a strong reputation for having the lowest churn rate in the streaming industry, but July told a different story.
The churn rate climbed to 2.8%, marking the highest monthly cancellation figure since February.
This surge translated to a loss of over 2 million subscribers during that month.
Political Backlash
The cancellations seemed to align with a campaign from Donald Trump supporters, who called for conservatives to cancel their Netflix subscriptions in retaliation for Hastings’s political stance.
Hastings took to social media platform X (formerly known as Twitter) to announce his support for Harris, and just a day later, he confirmed his sizable donation to a pro-Harris super PAC in an interview with The Information.
Bloomberg reported that July 26 became the worst single day for Netflix cancellations this year, just three days after Hastings’s donation news broke.
Changes at Netflix
This increase in cancellations may also tie back to Netflix’s decision to phase out its basic, ad-free tier, which didn’t sit well with some subscribers.
However, experts pointed out that the five days following Hastings’s endorsement were particularly telling, suggesting that this political endorsement had a notable impact on subscriber sentiment.
Historically, Netflix has attempted to distance itself from Hastings’s political affiliations, as the company is cautious about alienating subscribers with differing views.
Earlier this summer, Hastings was vocal about his desire for President Biden to step aside and allow a stronger Democratic candidate to emerge.
He even expressed in an email to the New York Times that “Biden needs to step aside to allow a vigorous Democratic leader to beat Trump and keep us safe and prosperous.”
Looking Ahead
As Netflix prepares to release its earnings report for the third quarter—covering the months of July to September—in mid-October, analysts are eager to see how these recent events may have impacted subscriptions.
With 277 million subscribers, Netflix remains the largest player in the streaming market, far ahead of its closest competitor, Amazon Prime Video.
Until July, Netflix had been on a growth streak, bolstered by a crackdown on password sharing that helped it add 13 million new customers last year.
In a twist of generosity, Hastings also donated 40% of his ownership stake in Netflix, valued at $1.1 billion, to the Silicon Valley Community Foundation, known for its tax breaks and privacy benefits.
This donation followed a surge in Netflix stock after a strong earnings report.
As Netflix navigates this tumultuous period, all eyes will be on how it responds to these challenges and what’s next for the streaming giant.
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