Netflix Limits Q2 Million Subscriber Losses, Forecasts Rebound

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Netflix limits its losses to one million subscribers in the 2 nd quarter and forecasts a rebound

Netflix will offer a fourth type of subscription.

Netflix has not said its last word. The streaming giant again lost subscribers in the second quarter, but less than expected. He is betting on a rebound this summer, giving hope to investors who feared a free fall.

The industry pioneer announced on Tuesday that it had lost 970,000 subscribers between the end of March and end of June, instead of the two million he expected.

It's not easy to talk about success when you've lost a million customers, acknowledged Reed Hastings, co-founder of Netflix.

But we are well prepared for next year, he added during a conference call.

The service, which now has 220.67 million paying subscribers worldwide, largely disappointed in the first quarter. He then admitted to losing subscribers for the first time in 10 years.

In a sign that Tuesday's news reassured the market, its stock rose more than 7% in electronic trading after the close of the New York Stock Exchange.

The Californian group published a turnover of 7.97 billion dollars for the period from April to June, a result below expectations, which x27;in particular, it was due to an unfavorable exchange rate.

On the other hand, it made 1.44 billion in net profit, better than expected.

These performances show that Netflix is ​​not in danger of going out of business for the moment, reacted the independent analyst Rob Enderle.

They bought time, which they need to stop the bleeding of subscribers, he continued.

Netflix expects to regain one million subscribers in the third quarter and thus reach 221.67 million paid subscribers. A figure nevertheless still below that of the end of 2021.

To achieve this, the platform is counting in particular on the success of the fourth season of the science fiction and teenage adventure series Stranger Things, which has just concluded, and also on the release impending release of The Gray Man, a film by the Russo Brothers, makers of Avengers : Endgame, which could turn into a franchise if it conquers the audience.

With 1.3 billion hours on the clock for season 4 of Stranger Things, noted Neil Saunders, the director of GlobalData.

However, the Netflix model is not as relevant to generating growth in a changing economy and consumer society, he added.

After years of rapid conquest, and after taking full advantage of the pandemic and health restrictions, Netflix is ​​undergoing a correction effect, amplified by competition, which has saturated the market in recent years. In addition to subscriber losses, there is an unfavorable economic context, from the war in Ukraine to inflation and the strong dollar.

Netflix remains the streaming leader, but unless it finds more franchises that resonate widely, it will end up struggling to stay ahead, says Ross Benes, eMarketer analyst.

In the first quarter, the service had lost 200,000 subscribers worldwide compared to the end of 2021. The news had plunged its price by 25%.

The bosses of the platform then announced, in April, their intention to offer a cheaper subscription formula, but with advertising, after years of refusing this less prestigious solution.

Given the strong demand from brands, this product should increase their revenue per user. But there's no evidence it's going to slow subscription cancellations or attract enough new consumers, Ross Benes pointed out.

Last week, the company clarified that the new subscription would be in addition to the three options already available (Essential, Standard and Premium), with the cheapest being $10 per month in the USA. But she did not give a date. According to the New York Times, the rollout could begin as early as the end of the year in some countries.

In April, Netflix also indicated that it was going to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people to x27; access platform content without paying.

We will have something that we can implement next year as planned, confirmed Greg Peters, Director of Operations.

The platform's slower growth also resulted in the layoff of more than 400 employees during the past quarter, mainly in the United States.

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