Netflix shares fell by a quarter Tuesday after the firm said that its subscriber base shrunk in the first quarter of this year.

The largest streaming television service lost subscribers for the first time in a decade. The corporation attributed the quarter-over-quarter decline to its usefulness being suspended in Russia due to Moscow's invasion of Ukraine.

Netflix had 221.6 million subscribers after the first quarter of this year, a modest decrease from the final quarter of the previous year.

The Silicon Valley technology company posted a net income of $1.6 billion in the recently finished quarter, down from $1.7 billion. Netflix shares fell more than 25% to $259.30 in after-hours trading following the release of the earnings results.

Netflix believes that one of the reasons impeding its growth is members sharing their accounts with people who do not live with them.

According to the streaming behemoth, while roughly 222 million homes pay for the service, accounts are shared with over 100 million additional households that do not pay membership costs.

"When we were growing fast it wasn't a high priority, and now we're working super hard on it," CEO Reed Hastings remarked on an earnings call.

"These are over a hundred million households that already are choosing to view Netflix; they love the service, we've just got to get paid in some degree for them."

Netflix is experimenting with ways to monetize account sharing by providing a feature that allows users to pay a small fee to add more households.

"If you've got a sister, let's say that's living in a different city, and you want to share Netflix with her – that's great," chief product officer Greg Peters said during the company's earnings call.

"We're not trying to shut down that sharing, but we're going to ask you to pay a bit more to be able to share with her."

Another impediment to Netflix's growth is stiff competition from industry titans such as Apple and Disney.

Squeezed by inflation

According to Enderle Group analyst Rob Enderle, Netflix and its streaming television rivals are also up against an inflation rate that has customers reassessing how many entertainment subscriptions they have amassed.

"With inflation taking hold, people are starting to watch their pennies," Enderle explained. "You get a situation where people are thinking through the subscriptions they have and the subscriptions that they keep."

Netflix, a market leader, will struggle to grow in such an economic environment, even more so in a market like the United States, Enderle told AFP.

Netflix recently increased subscription prices in the United States, with the entry-level plan now costing $9.99 and the top-tier project costing $19.99.

Netflix is considering establishing a lower-priced subscription tier supported by advertising, a technique that Hastings has previously dismissed.

"It's pretty clear that it's working for Hulu," Hastings remarked.

"If you still choose to have an ad-free experience, you will be able to do so. If you'd prefer a lesser price and are ad-tolerant, we'll accommodate you as well."

According to Upholdings portfolio manager Robert Cantwell, weaving advertisements into Netflix to generate revenue is "inevitable."

The battle for streaming television is heating up, with Disney demonstrating early this year that it was closing the gap on market leader Netflix, which has slowed its pace.

As with Amazon's Prime video streaming service, Disney follows Netflix's lead in investing in regional content that speaks the local language, culture, and tastes of the individual international markets.

Netflix has demonstrated that strategy by promoting original blockbusters such as South Korea's "Squid Game" and France's "Lupin."