Netflix lost nearly a million subscribers – and that’s good news

Netflix It lost fewer subscribers than feared in the last quarter, indicating a significant drop in members overall – but only after the warning, it will suffer an even bigger drop.

Earlier this year, Netflix reported its first decline in membership in more than a decade — a dip that should have foreshadowed an even bigger decline in subscriptions now. But NetflixThe number of subscribers fell by 970,000 to 220.67 million in April through June, it said, according to its second-quarter report on Tuesday.

This is still the deepest drop in membership the company has ever reported, but it beats NetflixApril directive that it will lose two million members worldwide. (Analysts, on average, essentially matched their estimates to Netflix guidelines, according to a survey by Refinitiv.)

It’s “difficult, in some ways, losing a million people and calling it a success,” Netflix co-CEO Reed Hastings said late Tuesday in a taped discussion of the results. “But really, we’ve been very well prepared for next year.”

However, Netflix’s forecast for the third quarter did not live up to analysts’ expectations, with Netflix forecasting it would gain 1 million members versus the consensus estimate of a 1.8 million subscriber increase.

Investors welcomed the news along the same lines, after Netflix’s stock price took a hit this year. In the last trading before entering the market on Wednesday, shares of Netflix rose 4% to $209.72. But the stock has lost two-thirds of its value so far this year, as Netflix’s abrupt decline in membership has undermined its standing as a Wall Street darling, just as it has undermined Hollywood’s confidence in broadcasting as the driver of television’s future.

Years of continuous growth in Netflix subscribers has prompted nearly all of Hollywood’s major media companies to pour billions of dollars into their broadcasts. This is what is called flow of wars Brought a wave of new services, including Apple TV PlusAnd the Disney PlusAnd the HBO MaxAnd the peacock And the Paramount Plus Streaming streaming options that have complicated the number of services you have to use (and often pay for) to watch your favorite shows and movies online.

Now, feeling the heat of the fierce competition to keep your interest and your subscription account, Netflix is ​​following the strategies you’ve rejected for years.

First, the company plans to launch cheaper ad-supported subscriptions for one person. Although Netflix has made its way into streaming TV, its ad-free strategy has fallen behind industry standards. When new competitors are launched, they set up memberships that give viewers like you more choices. Now most of Netflix’s competitors have a tiered model, usually offering cheaper memberships with ads, as well as expensive ad-free subscriptions.

Netflix is ​​also testing password-sharing fees, with the goal of getting more than 100 million families who already watch Netflix but don’t pay for it directly.

For now, these experiences are limited to Latin America, but Netflix said it plans to roll out a fee structure for account sharing in 2023.

At the moment, two schemes are being tested. Initially, Netflix charges a fee to add additional memberships as official “sub” accounts. Then, Netflix said it will try out a new method starting next month, which will charge you to add more “homes” where you can stream Netflix in addition to one primary residence, with a limit on the number of additional homes you can add depending on how much you’re already paying versus Netflix.

Elsewhere in its report, Netflix said that membership in the United States and Canada, the largest single region (for now), fell 1.3 million to a total of 73.28 million. Subscriptions in Europe, the Middle East and Africa also fell, dropping by 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 there.

Overall, in the most recent period, Netflix reported earnings of $1.44 billion, or $3.20 per share, compared to $1.35 billion, or $2.97 per share, a year ago. Revenue rose 8.6 percent to $7.97 billion.

Analysts expected average earnings per share of $2.75 and $8.04 billion in revenue.