Netflix had been expecting a tough second quarter with a steep drop in paid subscribers, but today’s financial report revealed a far less bleak picture than feared. Between April and June, the platform lost 970,000 subscriptions instead of the expected 2 million. This led to a 7% increase in stock prices in after-hour trading.
The cheapest ad-supported tier is slated for early 2023, and the same deadline applies to cracking down on 100 million households who don’t pay for the service, but use shared passwords.
Losing 1 million paying customers could be a major blow to the company on paper, but its revenues still grew 8.6%. Netflix revealed that this was possible thanks to an increase in paid subscriptions on average and ARM (average revenue per subscription). The number would have been even higher, but Netflix lost $ 339 million due to the impact of foreign currency.
As the company strengthens its positions in global markets, the strong dollar negatively affects its dollar-denominated results. Netflix also warns of future challenges and informs investors about the short and long-term steps that will increase sales.
The company’s forecasts for the third quarter of 2022 see the number of subscribers grow by 1 million, up from 4.4 million in the third quarter of 2021.
Bringing Microsoft on board to the ad-supported tier is key to Netflix, and plans include introducing the new plan “early 2023”. It will arrive first in markets where people tend to spend more, and once Netflix learns how the new plan works, it will expand to other regions. That would bring more paying subscribers on board, the company hopes.
We already reported that next year would be the year Netflix finally takes care of subscribers sharing passwords. According to the report, over 100 million households are not paying, in addition to the already 200 million paid bills. Once the company decides which method to use, it will implement the new plans and features.
Start a new Thread