Netflix Loses 1 Million Subscribers In Q2 2022, Confirms Ad-supported Tier For Early 2023
Netflix was anticipating a challenging second quarter, with a dramatic drop in paid subscribers; however, today's financial report showed a less grim image than expected.
Between April and June, the streaming service lost 970,000 subscribers instead of the anticipated 2 million. This resulted in an increase of 7% in prices for shares in the hours after hours of trading.
The ad-supported, less expensive tier is scheduled to launch in 2023. The exact timeframe applies to the 100 million households who don't purchase the services but use shared passwords.
The loss of 1 million paying customers could be a massive hit to the company's paper; however, its revenues still increased by 8.6 percent.
Netflix admitted that this was caused by an increase in the memberships paid on average and the ARM (Average Revenue per Member).
The figure could be higher; however, Netflix suffered a loss of $339 million because of foreign currency effects.
As the company consolidates its market share in global markets, the dollar's strength negatively affects its results in dollars.
Netflix also warns investors of the challenges and informs investors about short-term and long-term actions that could improve the company's sales.
The company's forecast for the quarter ending March 2022 shows the number of customers growing by 1 million, compared to 4.4 million in the third quarter of 2021.
The decision to bring Microsoft on board to support the ad-supported service is essential for Netflix, and plans are to launch the new program in "early 2023".
The first phase will be in areas where consumers tend to spend more money.
Then once Netflix can determine how well the new plan is functioning, it will extend to different regions. This will bring more customers on board Netflix hopes.
We've already said that the year to come is the year that Netflix will finally take on the problem of users sharing passwords.
The report states that nearly 100 million households aren't paying for their subscriptions, which is on top of the 200 million already paid accounts.
If the company chooses the method it will use, it will begin implementing these new programs and functions.