In an interview posted on its website, Netflix discussed its recent financial performance and disclosed that it had lost 970,000 customers in the second quarter of 2022. The loss, they continued, may appear to represent a big loss for the business, but it is actually better than the anticipated 2 million subscriber loss they anticipated for Q2. This follows a loss of 200,000 subscribers in the first quarter of this year.
In a letter to its shareholders, Netflix stated that “Q2 was better-than-expected on membership growth, and foreign exchange was worse-than-expected (stronger US dollar), resulting in 9% revenue growth (13% constant currency”.
They noted that their challenge and opportunity is to accelerate their revenue and membership growth by continuing to improve their product, content, and marketing while believing they are in a position of strength given their $30 billion-plus in revenue and $6 billion in operating profit last year.
“In its first four weeks, “Stranger Things” season four generated 1.3 billion hours viewed, making it our biggest season of English TV ever. Season four also re-ignited interest in past episodes with season one through season three, experiencing a greater than five-fold increase in viewing in the month after the release of season four (vs. the prior month). Season four of ‘Stranger Things’ also showcased the effectiveness of our marketing strategy in driving conversation around our titles”, they added.
Netflix is also planning to introduce another subscription plan – an ad-supported tier. The plan will be cheaper, and the company hopes it will solve the problem of password sharing and customers cancelling their subscritpion.
Potential causes of the subscriber drop
- Netflix saw a 16 million increase in sign-ups, thanks to the lockdown. People being socially distanced and being home all day long made them want to seek entertainment somewhere. As the world slowly gets back to the status quo, people have started dropping things they don’t see as necessary.
- The company is also facing increasing competition from other streaming platforms like Disney Plus and Prime Video, which continue to add new and engaging content like the TV series continuation of the Marvel Cinematic Universe the satirical comic adaptation of ‘The Boys’ respectively.
- In the streaming world, content is king and Netflix has sadly had more misses than hits in the quarter, with Stranger Things, Umbrella Academy, and so on.
- The economic state and inflation in most countries is also to blame. People consider their wants and needs, and the needs take precedence.