After Netflix announced it lost subscribers for the first time in more than a decade last quarter, the company’s second-quarter earnings report revealed global subscriber numbers fell by 1 million. , including a drop of 1.28 million in the United States and Canada alone. That’s better than its projection of losing 2 million globally, but the lack of subscribers in the US and Canada is double the 600,000 drop it predicted for the first quarter. Netflix now reports that it has 73.28 million paying subscribers in the United States and Canada, and 220.67 million worldwide.
This comes just a week after Netflix announced a partnership with Microsoft on its cheaper ad-supported tier which it plans to launch early next year. In the letter, Netflix emphasizes that its current plans will remain ad-free. Netflix executives remain optimistic about the prospect of an ad-supported level, noting that “over the long term, we believe advertising can drive substantial membership growth (through lower prices) and growth. profits (through advertising revenue).”
The plan is to roll it out first in markets where advertisers spend the most money, and Netflix executives write, “Our hope is to create a better-than-linear TV advertising model that’s more transparent and more relevant to consumers, and more. effective for our advertising partners.
Revenue grew 9% year-over-year, from $7.3 billion in 2021 to $7.97 billion this quarter. Although the streamer has encountered a few hiccups in recent months, including two separate layoffs affecting hundreds of workers, there has been some good news. The release of season 4 of stranger things propelled the series to second most-watched shows on the service, behind the Korean-language hit squid gamewhich Netflix announced in June would return for a second season.
An ad-supported tier is just one of the avenues Netflix is exploring to counter a drop in subscriber numbers; it’s also part of the company’s efforts to retain the ones it already has. But Netflix also wants to lock down unpaid subscribers, and it partially blamed password sharing for its initial drop in subscribers last quarter.
Netflix executives say they’re working on an “easy-to-use paid-sharing offering” which it aims to launch in 2023. In March, Netflix rolled out trials in Chile, Costa Rica and Peru which are supposed to allow users to add sub-accounts for users outside the primary account holder’s household. Netflix stepped up its efforts to crack down on password sharing this week and began allowing users in Argentina, El Salvador, Guatemala, Honduras and the Dominican Republic to buy an extra “home” located outside the main foyer where they can use Netflix on all devices.
Perhaps one of the biggest threats Netflix faces is growing competition from new players in the streaming industry, like Disney Plus, Paramount Plus, and HBO Max. Last quarter, Paramount Plus subscribers grew to nearly 40 million, HBO and HBO Max added another 13 million subscribers, and Disney Plus also gained 8 million new users. Disney Plus already has plans in place to launch an ad-supported tier later this year and will also use live streaming for some series like Dancing with the stars – something Netflix is currently testing.
Disclosure: The edge recently produced a series with Netflix.