Netflix bullish despite subscriber slump

Netflix outlined plans to kick start the company following a period of slowing growth, putting a focus on advertising and paid password sharing after a mixed Q2.

In a letter to shareholders announcing its earnings, Netflix claimed Q2 was better than expected on membership, while forex movements were worse than predicted due to a stronger US dollar.

Revenue was up 8 per cent year-on-year to $8 billion and net income increased from $1.3 billion to $1.4 billion. The forex effect shaved $339 million off its overall sales.

The streaming giant ended the quarter with 220.7 million subscribers globally, up from 209.2 million in Q2 2021.

Despite the growth, it is clear that Netflix is in the midst of a shake-up.

Worries about its future came to a head in April [1] when it missed its estimates for subscriber growth, and its share price price is down almost 70 per cent from the start of the year.

Challenge
A major cause for concern is the amount of people leaving the streaming service in the short-term. It lost 1 million subscribers in Q2, but this was less than the 2 million it had forecast, partly helped by the popularity of hit show Stranger Things.

Netflix acknowledged in the shareholder letter it had a “big challenge” on its hands to rekindle growth, which it will attempt to do through offering a lower priced advertising-tier subscription [2] option.

The company also intends to seek revenue from password sharing, which could impact more than 100 million households not currently directly paying for Netflix, it stated.

[1] https://www.mobileworldlive.com/apps/news-apps/netflix-braced-for-tough-2022-after-subscriber-wobble
[2] https://www.mobileworldlive.com/featured-content/apps-home-banner/netflix-partners-microsoft-for-ad-push

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