Chairman’s Political Endorsement Sparks Mass Exodus

Netflix faces a subscriber exodus as its chairman’s political endorsement sparks controversy.

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.
July 26 marked Netflix’s worst day for cancellations in 2023.
The hashtag #CancelNetflix trended as frustrated subscribers posted about their cancellations.

Netflix Faces Backlash Over Political Endorsement

Netflix, the streaming giant, is facing an unprecedented wave of cancellations following its chairman Reed Hastings’ endorsement of Vice President Kamala Harris for the presidency. The company’s churn rate in the United States nearly tripled, reaching a staggering 2.8% in July, the highest since February. This surge in cancellations coincided with Hastings’ public support for Harris and his substantial $7 million donation to a super PAC backing her campaign.

The backlash was swift and severe, with many Netflix subscribers, particularly Trump supporters, expressing their disapproval by canceling their subscriptions. The hashtag #CancelNetflix trended on social media platforms as frustrated users shared their decision to part ways with the streaming service. July 26 marked the single worst day for Netflix cancellations in 2023, highlighting the intensity of the public’s reaction.

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

Political Endorsement Sparks Controversy

Reed Hastings’ endorsement of Kamala Harris was not subtle. He publicly declared, “Congrats to Kamala Harris — now it is time to win.” This statement, coupled with his substantial financial contribution, ignited a firestorm among conservative Netflix subscribers who felt betrayed by what they perceived as a corporate alignment with liberal politics.

Adding fuel to the fire, Hastings also called for President Biden to step aside, stating, “Biden needs to step aside to allow a vigorous Democratic leader to beat Trump and keep us safe and prosperous.” This comment further alienated conservative viewers who saw it as an attack on the current administration and a push for a more liberal agenda.

The Impact on Netflix’s Business

The spike in cancellations raises questions about the long-term impact on Netflix’s business. While the company boasts 277.65 million global paid subscribers as of June 30, 2024, and generates nearly $10 billion in revenue each quarter, the political controversy has clearly struck a nerve with a significant portion of its user base.

The incident underscores the challenges businesses face when corporate executives involve themselves in politics. It’s a delicate balance between personal expression and maintaining a neutral corporate image, especially for a company with a diverse customer base spanning various political ideologies.

Looking Ahead

As Netflix prepares to announce its Q3 2024 results on October 17, 2024, all eyes will be on the impact of this political controversy on the company’s bottom line. The presentation, to be led by co-CEOs Ted Sarandos and Greg Peters, along with CFO Spence Neumann and VP Spencer Wang, will likely address the recent surge in cancellations and its potential long-term effects on the company’s growth strategy.

This incident serves as a stark reminder of the potential consequences when business and politics intersect. As companies navigate an increasingly polarized political landscape, the Netflix case study may prompt other corporations to reevaluate their approach to political involvement and the potential risks it poses to their customer relationships and overall brand image.