San Francisco, United States July 20 – Netflix on Tuesday reported losing subscribers for the second consecutive quarter as the streaming giant battled fierce competition and tightening viewership belts, but the company assured investors of better days ahead.
The loss of 970,000 paying customers in the last quarter was not as big as expected and left Netflix with just under 221 million subscribers.
“Tough in some ways to lose a million and call it a success, but we’re really well prepared for next year,” company co-chief and founder Reed Hastings said during an earnings presentation. .
The company said in its earnings report that it expects to gain one million paid subscribers in the current quarter.
Shares of Netflix rose slightly in aftermarket trading – a sign that investors were sticking with it.
Analysts noted that the results, while not as poor as feared, were still troubling.
“Netflix’s loss of subscribers was expected, but it remains a sore point for a company that relies entirely on consumer subscription revenue,” said analyst Ross Benes.
Benes added that “unless he finds more franchises that resonate broadly, he will eventually struggle to stay ahead of competitors who are after his crown.”
– Fewer free rides –
Netflix executives have made it clear that the company will toughen the sharing of usernames and passwords, which allows many to access content on the platform without paying.
“It’s great that our members love Netflix movies and TV shows so much that they want to share them more widely,” chief product innovation officer Chengyi Long said in a blog post on Monday.
“But today’s widespread account sharing between households compromises our long-term ability to invest in and improve our service.”
Long said an “add a home” subscription feature that Netflix began testing in March in Chile, Costa Rica and Peru will expand to Argentina, the Dominican Republic, Honduras, El Salvador and in Guatemala.
Netflix said it aims to widely roll out an account-sharing payment system by next year.
Meanwhile, Netflix is working with Microsoft to launch a cheaper subscription plan that includes ads, which The New York Times says could launch by the end of this year.
Netflix opted to expand the lower-cost offering after a disappointing first quarter in which it lost subscribers for the first time in a decade – and after years of resisting the very idea of running ads.
Microsoft will be responsible for building and managing the platform for advertisers who want to serve ads to Netflix users.
“These results buy them time, and they need time to focus on stopping the bleeding,” analyst Rob Enderle of Enderle Group told AFP.
“Netflix faces significant competition; holding on as well as they did is an example of their resilience, but they weren’t out of the woods.
– ‘Stranger things’ –
Netflix has invested heavily in original content such as hit shows “Squid Game” and “Stranger Things” to fend off strong competitors such as Disney, with its Marvel and Star Wars franchises.
The recently released fourth season of ‘Stranger Things’ has racked up 1.3 billion viewing hours in just four weeks on Netflix, making it the platform’s biggest English-language TV release, according to the company. .
Meanwhile, some 284 million hours have been spent watching the final season of ‘The Umbrella Academy’, executives said.
Action-thriller ‘The Gray Man’ – based on a novel of the same name and slated for release on Netflix on Friday – is “stunning”, said co-chief Ted Sarandos during the results presentation.
“Netflix’s ability to produce successful content is indisputable,” said Neil Saunders, CEO of GlobalData.
“However, with the loss of nearly one million members since the previous quarter, translating this into business success is proving more difficult.”
Challenges Netflix faces include changing habits, as housebound people who signed up to the service during the height of the pandemic are reevaluating their subscriptions now that they’re returning to their old lifestyles, Saunders noted.
The analyst pointed out that Netflix had about 27.7 million more paid subscribers in the last quarter than in the same period a year earlier.
“Despite the downturn, Netflix isn’t struggling,” Saunders said.
“However, returning to growth will require change – but that change must be more about evolution than revolution.”