Yesterday, global streaming service Netflix announced via its Q2 2022 financial results that it lost 970,000 subscribers in the second quarter of the year.
This is the second time in a row that the streaming service is suffering a massive blow to its subscriber base. In the first quarter of this year, the service reported its first subscriber loss in 10 years with a 200,000 subscriber decline.
At the time, Netflix outlined 4 reasons for its subscriber decline: an increase in streaming services; geopolitical events like Russia’s invasion of Ukraine; a decline in addressable market; and more notably, an increase in household password sharing. According to Netflix, over 100 million of its 222 million paying subscribers are sharing their passwords with people outside of their households.
Netflix experiencing another dip in its subscriber count doesn’t come as a shock to the service because it predicted, in April, that it would lose up to 2 million subscribers in Q2. Its subscriber growth decline, however, was less than half of that. Netflix’s biggest subscriber loss came from its largest markets, the US and Canada, where Netflix said it lost 1.3 million users. This number was offset by an increase in subscribers from other regions.
While the streaming service has not commented on reasons for its recent decline, experts project that it’s due to the proliferation of streaming services. With the launch of HBO Max, Disney+, Hulu, Amazon Prime Video, Netflix’s library of movies, series and even games will be limited as more studios launch their own streaming platforms.
Netflix, however, still has the biggest share of the streaming service market with 220 million subscribers while Amazon’s Prime Video holds 200 million, while Disney+ and HBO Max hold 87.6 million and 74 million subscribers respectively.
1 million subscribers in Q3
The service also plans to keep its top spot and add 1 million subscribers to its tally by Q3.
To do this, the service will implement a few long-term solutions, including increased movie and game development budgets. It’s introducing ads to its platform in a partnership with Microsoft. Later this year, starting with the US and Canada, the platform will introduce a cheaper ad-tier option for streamers.
The platform is also taking a tough stance on password-sharing as it announced the testing of an “add a home” feature which will charge users an extra $3 to share accounts with users in other households. “We know this will be a change for our members,” the company said in a statement. “Our goal is to find an easy-to-use paid sharing offering that we believe works for our members and our business that we can roll out in 2023.”
In its letter to its shareholders, the service stated that Q2 was “better than expected”.
While its total number of subscribers might have declined by 970,000, its year-on-year revenue, however, increased by 9% in Q2 2022.
The streamer’s net profit for the quarter was $1.44 billion, up 6.5% from $1.35 billion in Q2 2021. It, however, noted that it expects its revenue growth would slow to 4.5% by Q3.
Despite this news, Netflix’s shares jumped by 7% after the report was released.