Netflix lost one million subscribers in the three months to June as it struggled to retain customers in the face of fierce competition and rising living costs.
The US streaming giant, which is responsible for popular shows such as Stranger Things, Bridgerton and Squid Game, reported that subscriber numbers fell by 1 million between April and June as it struggles to stem the rot in viewing figures.
This marks the second straight quarter of subscriber losses for Netflix, following a drop of 200,000 earlier this year. The decline at the start of the year is its first decline in a decade. However, Netflix called the latest losses “better than expected.”
The company cited the success of its latest season of Stranger Things for boosting retention.
It also revealed that it plans to crack down on the 100 million households it says share a Netflix password without paying for the service.
The tech company faces increasing competition from Disney, Apple, Paramount, Hulu and Amazon as its once-dominant position is threatened.
A contraction in the cost of living is also hurting as households try to save money.
In the UK, Netflix’s share of new subscribers fell to just 4.5% from 15% in the same period last year. A Kantar report found that a third of Americans plan to close a video streaming account to save money to keep up with inflation.
The results followed what analysts described as a “spectacularly poor” performance a day earlier this year, as Netflix’s growth slowed and it warned that its subscriber numbers would begin to decline.
Netflix has already lost about two-thirds of its market capitalization so far this year, valuing it at about $90bn (£75bn), or $201 a share, on Tuesday night.
Tuesday’s drop in subscribers was smaller than Netflix’s forecast of 2 million. He also predicted that the number of subscribers could start to increase later this year. Shares rose 6% in after-hours trading.
Revenue rose 8.8% year over year to just under $8 billion in the three months ending in June.
Netflix has poured billions of dollars into original shows, many produced in the UK, as it looks for hits that can win back viewers from rivals. But despite spending hundreds of millions of dollars on new films, including $200 million for The Gray Man starring Ryan Gosling, many of them failed to make a splash with critics.
Heavy content spending also left it sitting on a $14 billion debt pile.
In an effort to shore up revenue and account numbers, Netflix is considering charging customers who share their passwords an extra fee. It has begun testing the fee for some customers in Latin America. Users will be asked to “add home” to their account at a cost of $1.70 to use their account elsewhere.
Netflix is also working on an ad-supported product that will be available at a discounted price. The streaming company has signed a deal with Microsoft to build its ad technology. Analysts have estimated that an ad-supported tier could bring in between $500 million and $1.5 billion per quarter.
Add Comment