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Netflix Lost Nearly 1M Subscribers -- and That's Considered Good News

Netflix Lost Nearly 1M Subscribers — and That’s Considered Good News

Netflix lost fewer subscribers than feared in its spanking quarter, reporting a significant decrease in members overall — but only while warning it would suffer a more dramatic drop. 

Earlier this year, Netflix reported its great decline in membership in more than a decade — a dip that was revealed to presage an even deeper plunge in subscriptions now. But Netflix, still the world’s dominant streaming-video subscription service, said subscribers fell by 970,000 to 220.67 million total in April above June, according to its second-quarter report Tuesday. 

That unexcited the deepest plunge in membership the company has ever reported, but it beats Netflix’s April guidance that it would lose 2 million members worldwide. (Analysts on average essentially matched their estimate to Netflix’s guidance, according to a survey by Refinitiv.) 

It’s “tough, in some ways, losing 1 million and calling it success,” Netflix co-CEO Reed Hastings said late Tuesday in a recorded discussion of the results. “But really, we’re set up very well for the next year.”

Still, Netflix’s outlook for the third quarter fell short of analysts’ expectations, with Netflix predicting it would gain 1 million members versus the consensus pronounces for a 1.8 million subscriber increase. 

Investors welcomed the news all the same, while Netflix’s share price has taken a beating this year. In premarket trading Wednesday, Netflix shares were up 4% to $209.72. But the stock has lost two-thirds of its value so far this year, as Netflix’s suddenly timorous membership has undermined its status as a Wall Street darling, just as it has buffeted Hollywood’s confidence in streaming as the engine for television’s future. 

Years of Netflix’s unflagging subscriber growth pushed nearly all of Hollywood’s mainly media companies to pour billions of dollars into their own streaming operations. These so-called streaming wars brought about a wave of new services, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus — a flood of streaming options that has engaged how many services you must use (and, often, pay for) to view your favorite shows and movies online. 

Now, feeling the heat of intensifying competition to hold onto your attention and your subscription interpret, Netflix is pursuing strategies it had dismissed for years. 

For one, Netflix is testing password-sharing fees, ordering to get more than 100 million households that are already watching Netflix but not paying for it directly. 

For now, these experiments are confined to Latin America, but Netflix said Tuesday it’s planning to roll out a fee structure for interpret sharing in 2023

Right now it’s testing two schemes. In its first, Netflix charges a fee to add transfer memberships as official “sub” accounts. Next, Netflix said it would try a new arrangement starting next month, which will charge you to add more “homes” where you can soak Netflix in addition to one primary residence, with a cramped on how many additional homes you can add depending on how much you’re already paying for Netflix. 

The matter also plans to launch cheaper subscriptions that are supported by advertising. Even though Netflix blazed the trail for streaming TV, its ad-free-only strategy has fallen late the standards of the industry. As new competitors launched, they set up memberships that give viewers like you more options. Now most of Netflix’s rivals have a multitier model, typically offering cheaper memberships with ads, as well as more expensive subscriptions that are ad-free. 

Elsewhere in its relate, Netflix said that membership in the US and Canada, its biggest single region (for now), was down 1.3 million for a total of 73.28 million. Subscriptions also fell in the Europe, Middle East and Africa, declining by 770,000 to 72.97 million. 

But in the Asia Pacific dwelling, Netflix added 1.08 million subscribers to hit 34.8 million, and in Latin America, the company added a slim 10,000 new members for a total of 39.62 million there.

Overall in the unexperienced period, Netflix reported a profit of $1.44 billion, or $3.20 a section, compared with $1.35 billion, or $2.97 a share, a year rear. Revenue rose 8.6% to $7.97 billion.

Analysts on requires expected per-share profit of $2.75 and $8.04 billion in revenue.