In a letter to shareholders, Netflix reported that it lost 9,70,000 subscribers in the second quarter of this year.
This, however, comes as relatively good news, as the company had revealed in April that it expected to lose 2 million subscribers. Its revenue for this quarter has also grown by 9 percent year-on-year to $7.97 billion.
Netflix attributed this loss of subscribers to password sharing, competition, sluggish economic growth, and the war in Ukraine. It estimates it will be able to add 1 million subscribers in the next quarter.
The company also pointed towards a Nielsen report that showed it was able to corner 7.7 percent of total TV viewing in the United States in June 2022, as compared to 6.6 percent last June.
The revelation in April that the world's largest streaming platform lost subscribers for the first time in a decade and forecast of a 2 million subscriber loss had sent stocks plummeting by 40 percent in two days.
The overall value of Netflix shares had declined by nearly 70 percent since the beginning of the year but, after news broke that the company had not lost as many subscribers as expected, share prices rose by 8 percent.
While the success of hit series Stranger Things might have cushioned Netflix’s performance (season 4, released last month, racked up 1.3 billion hours of viewing), competitors seem to be catching up in terms of creating high quality shows – HBO received 140 Emmy nominations this year, as opposed to Netflix’s 105.
Netflix laid off 450 members of its staff last quarter.
Netflix's Tryst With Ads
“We’ve now had more time to understand these issues, as well as how best to address them,” Netflix said, as it laid out its plans to retain its position as the king of OTT.
It's biggest strategy currently seems to be the addition of a new subscription tier at a lower cost, where viewers will be shown advertisements as well.
Netflix has shied away from introducing advertising on its platform for a long time, so this comes as a 180 degree turn for it.
"Those who have followed Netflix know that I have been against the complexity of advertising and a big fan of the simplicity of subscription," said CEO Reed Hastings in April.
However, he maintains that it is necessary to offer “consumer choice” and adding a lower-priced subscription plan will help expand that for the advertisement-tolerant.
Last week, the company announced its partnership with Microsoft to bring advertising on the platform, but more details regarding the new tier are yet to come.
Netflix has also claimed that it is testing a new feature that should help curb password sharing, where people can pay a small fee to add another “home” or a “member” to an existing account. This feature is being trial-run in Latin America at the moment.
The company has also been venturing into gaming, and has been releasing games every few weeks since November. It has 24 games out so far, including titles like Asphalt Xtreme and Knittens, and has acquired three games studios to expand its offerings.
(With inputs from TechCrunch and Business Insider.)
(At The Quint, we are answerable only to our audience. Play an active role in shaping our journalism by becoming a member. Because the truth is worth it.)