As Netflix battled intense competition and viewers tightening their belts, the streaming giant reported losing members for the second quarter in a row, but the company assured investors of better days ahead. Because of this, Netflix’s most recent quarter saw a net loss of only 970,000 paying users, compared to the estimated loss of a million or more subscribers.
The company’s co-chief and founder Reed Hastings stated “Tough in some ways, losing a million and calling it success, but really we are set up very well for the next year,”
One million paying customers were expected, the business claimed in its earnings report. After-hours trading on Netflix’s stock showed a small gain, indicating that investors are sticking with the company. Even if the findings weren’t as bad as expected, they were nevertheless a cause for concern, according to AFP analysts.
“Netflix’s subscriber loss was expected but it remains a sore point for a company that is wholly dependent on subscription revenue from consumers,” according to the analyst Ross Benes. He further added that “unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown.”
According to Netflix’s executives, sharing logins and passwords, which allows consumers to access the platform’s content without paying, will be more difficult going forward. The “add a home” subscription feature is being tested in various regions by Netflix.
The New York Times reports that Netflix is collaborating with Microsoft on a lower-cost subscription option that includes adverts. Because of a disappointing first quarter in which it lost customers for the first time in a decade — and because it had long resisted showing advertisements, Netflix decided to create the lower-cost option. For advertisers who wish to offer Netflix viewers with advertising, Microsoft will be in charge of creating and operating the platform.
“These earning results buy them time, and they need time to focus on stopping the bleeding,” analyst Rob Enderle of Enderle Group stated to AFP. “Netflix is facing a significant amount of competition; to hold on as well as they have is an example of how resilient they are but they are not out of the woods.”