Netflix lost fewer subscribers than feared in its last quarter, reporting a significant decline in members overall, but only after warning it would suffer a more dramatic drop.
Earlier this year, Netflix reported its first drop in membership in more than a decade, a drop that was supposed to foreshadow an even deeper drop in subscriptions now. But Netflix, still the world’s dominant streaming video subscription service, said subscribers fell 970,000 to 220.67 million in total from April to June, according to its second-quarter report on Tuesday.
It’s still the deepest drop in membership the company has ever reported, but it surpasses Netflix’s April target of losing 2 million members worldwide. (Average analysts essentially matched his estimate with Netflix’s guidelines, according to a Refinitiv survey.)
It’s “hard, somehow, to lose 1 million and call it a success,” Netflix co-CEO Reed Hastings said Tuesday afternoon in a recorded discussion about the results. “But really, we’re very well prepared for next year.”
However, Netflix’s outlook for the third quarter did not meet analysts ’expectations, as Netflix predicted it would gain 1 million members compared to the consensus estimate of a 1.8 million increase. subscribers.
Investors welcomed the news, after the Netflix stock price hit a beating this year. In the last pre-market trading on Wednesday, Netflix shares rose 4% to $ 209.72. But shares have lost two-thirds of their value so far this year, as the sudden decline in Netflix membership has undermined his status as a Wall Street sweetheart, just as it has affected Hollywood confidence. in transmission as the engine of the future of television.
Years of uninterrupted growth of Netflix subscribers pushed almost every major Hollywood media company to invest billions of dollars in their own streaming operations. These so-called real-time streaming wars sparked a wave of new services, such as Apple TV Plus, Disney Plus, HBO Max, Peacock, and Paramount Plus: a plethora of real-time streaming options that have complicated how many services you need. ‘use (and often pay for) to watch your favorite shows and movies online.
Now, in the heat of intensifying competition to keep your attention and your subscription account, Netflix is pursuing strategies it had rejected for years.
On the one hand, the company plans to launch cheaper subscriptions that are compatible with advertising. While Netflix paved the way for streaming TV, its ad-only strategy has lagged behind industry standards. As new competitors were launched, they created members that offered more options to viewers like you. Now most Netflix rivals have a multi-tiered model, which typically offers cheaper members with ads, as well as more expensive subscriptions without ads.
And Netflix is also testing password-sharing rates, with the goal of getting more than 100 million households already watching Netflix but not paying for it directly.
For now, those experiments are limited to Latin America, but Netflix said it plans to implement a rate-sharing fee structure in 2023.
He is currently testing two schemes. In the first, Netflix charges a fee to add additional members as official “sub-accounts.” Netflix then said it would try a new method starting next month, which will charge you to add more “homes” where you can play Netflix in addition to a primary residence, with a limit on how many additional homes you can add depending on how . much that you are already paying for Netflix.
Elsewhere in its report, Netflix said membership in the United States and Canada, its largest region (for now), dropped 1.3 million to a total of 73.28 million. Subscriptions also fell in Europe, the Middle East and Africa, with a drop from 770,000 to 72.97 million.
But in the Asia Pacific region, Netflix added 1.08 million subscribers to reach 34.8 million, and in Latin America, the company added 10,000 new members for a total of 39.62 million.
In total, in the last period, Netflix reported a profit of $ 1.44 billion, or $ 3.20 per share, compared to $ 1.35 billion, or $ 2.97 per share, a year earlier. Revenue rose 8.6% to $ 7.70 billion.
Analysts expected an average earnings per share of $ 2.75 and $ 8.04 billion in revenue.