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Saturday, February 4, 2023

Netflix loses 1 million subscribers in Q2, half of expectations, but grows 9%

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The Netflix app on a mobile phone screen.Brandon Bell (AFP)

The bad omens came true, but only partially. Ever since the Netflix platform faltered in April, revealing that it had lost 200,000 subscribers in the first quarter of the year and would lose two million in the second quarter, both Wall Street and Hollywood have been awaiting the results achieved between April and June. , for what it can say about the course of a phenomenon that der streamwhich not a few consider to be their climax.

In a day of widespread gains – the three main indices posted nearly 3% this Tuesday – the platform that once spearheaded the phenomenon of on-demand entertainment has partially confirmed forecasts, with a loss of a million subscribers between April and June half of what was expected. The company posted sales growth of 9% to $7.9 billion, profits that would have been higher had the dollar’s value not depressed other world currencies. However, the largest customer churn in the company’s history hasn’t stopped it from salvaging the furniture.

Netflix has spent the last three months adjusting its business model to face the rest of the year amid heightened economic uncertainty. Other actions taken include laying off 450 employees and announcing a new subscription tier with a cheaper fee open to advertising in return; also the revision of the system that allows the sharing of passwords, ie the introduction of a firewall, which many consider too late. The Giant’s Choices stream They are followed closely by the competition because they are able to break new ground, especially with regard to breaking the taboo of advertising. Other platforms that are direct competitors, like HBO, have long offered two tiers of subscriptions with different fees depending on whether they offer advertising or not.

Previously perfectly legitimate account hacking is also depriving Netflix of an additional number of customers. The company has nearly 221 million subscribers today headlines, assuming there are tens of millions more sharing passwords rather than logging in with their own fees. As of early 2021, more than 850 million people had subscribed to some type of service. stream in the world.

In addition to its management woes, Netflix has also suffered a content setback, receiving fewer 2022 Emmy nominations than its main competitor HBO, despite offering a richer programming offering than cable and its offshoots stream, HBO Max. HBO won 140 nominations compared to Netflix’s 105, a result that underscores the growing difficulty for platforms to consistently produce content that resonates with viewers.

All of the data collected since April had Wall Street on high alert, where Netflix stock is down 46% since its first-quarter earnings report and nearly 70% year-to-date. The updated value of the titles will be announced this Wednesday in the first session after the results presentation.

Most analysts expected the second quarter to drop subscribers in line with Netflix projections, despite the success of season four stranger things, according to the company the most reproduced series in its history. Experts predict more trouble for the rest of the year as more subscribers are likely to leave the service once the last season of the popular show is over. The concern is based on the assumption that Netflix has peaked in subscriber numbers in the US and Canada and that its initial growth projections for the rest of the world were overblown. Some experts reduce the total potential market to 400 million customers worldwide, instead of the one billion the company is aiming for.

The ambivalent results of the second quarter, with a relative loss of subscribers and at the same time higher revenues, will present an uncertain scenario for experimenting with the new advertising layer, a service promoted by Microsoft, although fears remain that the introduction of an optional cheapest subscription Cannibalize ad-free subscriptions.

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Source elpais.com

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