Earlier this year, Netflix reported its first decline in membership in more than a decade — a drop that was supposed to foreshadow an even deeper plunge in subscriptions now. But Netflix, still the world’s dominant subscription video streaming service, said subscribers fell by 970,000 to 220.67 million overall in April to June, according to its second-quarter report on Tuesday. That’s still the deepest membership drop the company has ever reported, but it beats Netflix’s guidance in April that it would lose 2 million members worldwide. (Analysts on average essentially matched their estimate with Netflix’s guidance, according to research by Refinitiv.) It’s “hard, in some ways, to lose $1 million and call it a success,” Netflix co-CEO Reed Hastings said late Tuesday in a recorded earnings call. “But really, we’re very well set up for next year.” However, Netflix’s third-quarter outlook fell short of analysts’ expectations, with Netflix forecast to gain 1 million members versus the consensus estimate for an increase of 1.8 million subscribers. Investors welcomed the news in the same way, since Netflix’s stock price has taken a hit this year. In late premarket trading Wednesday, Netflix shares rose 4% to $209.72. But the stock has lost two-thirds of its value so far this year as Netflix’s suddenly shrinking membership has undermined its status as a Wall Street darling, just as it has hurt Hollywood’s confidence in streaming as an engine for its future. television. Years of unparalleled Netflix subscriber growth have prompted nearly all of Hollywood’s major media companies to pour billions of dollars into their own streaming operations. These so-called streaming wars have spawned a wave of new services, including Apple TV Plus, Disney Plus, HBO Max, Peacock and Paramount Plus — a flood of streaming options that has complicated the number of services to use (and, often, pay for for) to watch your favorite shows and movies online. Now, feeling the heat of intensifying competition to keep your attention and your subscription bill, Netflix is pursuing strategies it had rejected for years. The company plans to launch cheaper ad-supported subscriptions, for one. Although Netflix has blazed the trail for streaming TV, its ad-only strategy has fallen behind industry standards. As new competitors have launched, they’ve created subscriptions that give viewers like you more options. Now most of Netflix’s competitors have a tiered model, typically offering cheaper subscriptions with ads as well as more expensive subscriptions without ads. And Netflix is also testing password-sharing fees, aiming to reach the more than 100 million households that already watch Netflix but don’t pay for it directly. For now, these experiments are limited to Latin America, but Netflix said it plans to roll out a fee structure for account sharing in 2023. He is currently testing two regimens. In its first, Netflix charges a fee to add additional subscriptions as official “sub” accounts. Netflix then said it will test a new method starting next month that will charge you to add more “homes” where you can stream Netflix other than one main home, with a limit on how many additional homes you can add depending on how much you already pay for Netflix. Elsewhere in its report, Netflix said membership in the US and Canada, its largest single territory (for now), fell by 1.3 million, for a total of 73.28 million. Subscriptions also fell in Europe, the Middle East and Africa, down 770,000 to 72.97 million. But in the Asia-Pacific region, Netflix added 1.08 million subscribers to reach 34.8 million, and in Latin America, the company added 10,000 new members for a total of 39.62 million there. Overall in the latest period, Netflix reported earnings of $1.44 billion, or $3.20 per share, compared with $1.35 billion, or $2.97 per share, a year earlier. Revenue rose 8.6% to $7.97 billion. Analysts on average were expecting earnings per share of $2.75 and $8.04 billion in revenue.
