Netflix, the American streaming service giant, reportedly lost about 1 million subscribers this spring due to rising competition and soaring levels of inflation that is pressuring household budgets. This has further elevated the urgency with which the video streaming giant is putting efforts to introduce a low-cost alternative option that contains commercial breaks.
As per reports, the shedding of 970,000 accounts, disclosed on Tuesday as part of Netflix's second-quarter financial report, is by far the firm's worst quarterly subscriber loss in its 25-year history. However, it could have been worse given that Netflix management had issued an estimate in April where it feared a loss of over 2 million subscriber during the Q2.
The less drastic fall in subscribers, coupled with an estimation that growth will resume in the July–September timeframe, helped Netflix's tattered stock rise by 7% in after-hours trading after the numbers were released.
Netflix's April-June decline follows a drop of 200,000 subscribers in Q1 this year, marking the first time Netflix's subscriber figures have plummeted in consecutive quarters after the company began transitioning from DVD-by-mail rentals to streaming 15 years ago.
The loss of about 1.2 million users in the first half of this year contrasts with the pandemic-driven boom that Netflix experienced in the first half of 2020 when its streaming platform added approximately 26 million subscribers.
Netflix still profited $1.4 billion, or $3.20 per share, during the quarter, a 6% rise from the same period last year, despite the decline. Revenue increased by 9% to $8 billion in comparison to the same time in 2021
Netflix had 220.7 million global subscribers at the end of June, much more than any of its latest competitors, including Walt Disney Co. as well as Apple. In a positive sign, Netflix management projected that its service would add around 1 million subscribers between July and September, indicating that the worst of its decline may be over.
Netflix's stock price has dropped nearly 70% this year, losing approximately $180 billion in shareholder wealth.
Meanwhile, the firm had raised prices to help fund its original content, just as the sky-high inflation rates, the highest in around 40 years, cause consumers to cut back on discretionary items expenses like entertainment.