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Netflix loses one million subscribers in Q2, to launch ad version in 2023

Netflix loses one million subscribers in Q2, to launch ad version in 2023
Netflix loses one million subscribers in Q2, to launch ad version in 2023

Netflix has released it second quarter 2022 financial results and business outlook, with the streamer losing 970,000 subscribers during the three-month period (from April to June), just short of the one million mark. This, in fact, is a relief for Netflix as the streamer had initially projected to lose two million subscribers during the quarter. 

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The streamer lost subscribers during the April-June time period, during which the first part of Stranger Things Season 4 launched.

Asked what could have prevented subscriptions from losing further, chief executive Reed Hastings said: "If there was a single thing, we might say 'Stranger Things.'"

Season four of the popular drama, which has been a huge success with 13 Emmy nominations, seemed to have helped the streaming platform from losing subscribers massively. Netflix intelligently split up the series into two parts, deliberately delaying its release iso the first seven episodes fell during Q2 (May 27th) to encourage new signups, while Part 2 was saved for July 1st so they would debut in Q3.

The loss of subscribers is phenomenal in the history of the streaming platforms. The US and Canada, followed by Europe, accounted for the highest number of cancellations during this quarter.

Netflix stock closed at $201.63 per share on Tuesday. Netflix co-CEOs Reed Hastings and Ted Sarandos will talk about the results today in a web interview.

The ad-supported version will be launched in early 2023. This is in contrast to the earlier projection that the lower-priced version will debut by the end of this year. 

 

First quarter

The first quarter of this year saw a loss of 200,000 subscribers; it was the first time since 2011 that it lost subscribers.

Password-sharing was attributed as one of prime reasons for the loss.

"Streaming is winning over linear, as we predicted, and Netflix titles are very popular globally. However, our relatively high household penetration – when including the large number of households sharing accounts – combined with competition, is creating revenue growth headwinds," said a letter issued in April.

One of the reasons for the loss of subscriber could be due to the fact that people are returning to their pre-pandemic lifestyle. The increasing living costs is another reason. 

Once a disruptor, Netflix today is losing its leadership position with increasing competition from rivals such as Disney+ and Amazon Prime Video.

"Netflix is still the leader in video streaming but unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown," said Insider Intelligence analyst Ross Benes.

"When you're the leader, there's only one direction to go, especially when a large amount of competition launches, which is what Netflix has seen in the last couple of years,”Ampere Analysis executive director Guy Bisson said.

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