Netflix faces a surge in cancellations as its chairman’s political endorsement sparks customer backlash.
At a Glance
- Netflix cancellations nearly tripled after co-founder Reed Hastings endorsed Kamala Harris
- Hastings donated $7 million to a super PAC supporting Harris’s presidential campaign
- The cancellation rate in the US hit 2.8% in July, the highest since February
- July 26 marked Netflix’s worst day for cancellations in 2023
Netflix Faces Subscriber Exodus Following Political Endorsement
Streaming giant Netflix experienced a significant surge in account cancellations after its co-founder and chairman, Reed Hastings, publicly endorsed Vice President Kamala Harris for president. The endorsement, coupled with a substantial donation to Harris’s campaign, triggered a wave of customer dissatisfaction, particularly among supporters of former President Donald Trump.
According to reports, Netflix’s churn rate in the United States nearly tripled following Hastings’ endorsement. The cancellation rate hit 2.8% in July, marking the highest level since February. This spike in cancellations coincided with Netflix’s decision to discontinue its basic ad-free plan, further compounding the company’s challenges.
Netflix suffered a surge in cancellations in the days after its co-founder and chairman, Reed Hastings, endorsed Kamala Harris for president and donated millions to her campaign https://t.co/FUQjOdYiLf
— Bloomberg (@business) September 30, 2024
The Fallout from Hastings’ Endorsement
The controversy began when Reed Hastings congratulated Kamala Harris on becoming the Democratic nominee and made a substantial $7 million donation to an anti-Trump PAC supporting her campaign. This move prompted Trump supporters to call for a boycott of Netflix, with some falsely claiming that the company itself had donated to Harris.
“Congrats to Kamala Harris — now it is time to win.” – Hastings
The backlash was swift and intense. The hashtag #CancelNetflix trended on social media as frustrated subscribers posted about their decisions to cancel their subscriptions. July 26 marked Netflix’s worst day for cancellations in 2023, with the five days following Hastings’ endorsement showing unusually high cancellation rates.
Long-Term Impact and Political Involvement
While the immediate impact of the cancellations was significant, the long-term effects on Netflix’s business remain unclear. The company boasts a massive global subscriber base of 277.65 million paid subscribers as of June 30, 2024, and generates nearly $10 billion in revenue each quarter.
“Biden needs to step aside to allow a vigorous Democratic leader to beat Trump and keep us safe and prosperous.” – Hastings
This incident highlights the potential consequences for corporations when their leaders take political positions. Hastings has a history of donating to both Democratic and some Republican candidates and PACs. He has been vocal about the upcoming election, even calling for President Biden to step aside for a stronger Democratic candidate.
Corporate Politics and Customer Loyalty
The Netflix controversy is reminiscent of other social media-led boycotts against companies with diversity, equity, and inclusion (DEI) initiatives. Many companies, including Netflix, implemented such initiatives following the 2020 Black Lives Matter movement. However, these efforts have sometimes intersected with politics, leading to customer backlash.
As the dust settles on this incident, Netflix and other corporations may need to reevaluate how their leaders’ personal political stances can affect customer loyalty and, ultimately, their bottom line. The upcoming Q3 2024 results announcement on October 17, 2024, may provide more insight into the long-term impact of this controversy on Netflix’s business performance.
Sources:
- Netflix cancellations nearly tripled after co-founder Reed Hastings endorsed Kamala Harris: report
- Netflix Cancellations Nearly Tripled After Chairman Reed Hastings Endorsed Kamala Harris
- Netflix Cancellations Spiked After Reed Hastings Donated to Kamala Harris
