Netflix has been steadily losing subscribers for the last two quarters. But the situation could be improving for the company.
Netflix’s Q2 earnings report revealed the number of worldwide subscribers dipped by 1 million. To be precise, the streaming company lost 970,000 subscribers between April and June 2022. This is the second consecutive quarter in which Netflix has lost paying members. It is concerning to note that several long-term subscribers are choosing to abandon Netflix.
Despite the seemingly gloomy prospect, Netflix may be reversing the trend in the other areas that actually matter to investors and shareholders. Netflix's shares have fallen about 67% this year on concerns about future growth. However, the company’s share prices jumped 7% in a single day’s after-hours trading.
Netflix had predicted that it would lose around 2 million subscribers in the second quarter. The actual numbers are substantially lower. This might suggest that thousands of subscribers decided to continue paying for accessing content on Netflix.
Moreover, Netflix added a million new subscribers. The number is lower than the 1.8 million expected by analysts. But this does indicate that Netflix isn’t just losing customers, and is certainly not on the path of becoming an abandoned service.
In a letter to its shareholders, Netflix has blamed password sharing, competition, and a sluggish economy. However, with nearly 221 million global paid subscribers, Netflix is still the biggest streaming service around the world.
Netflix’s revenue has grown by 9%, which may have increased by about 13%, but the foreign exchange impact held it back, claimed the company.
Netflix is trying multiple ways to increase its revenue from paying subscribers. It is also seriously considering penalizing password sharing. The company has partnered with Microsoft to offer a new, lower-priced subscription that would have ads. Such steps could help the company become leaner and more profitable in the long term, even if it loses a few subscribers.