Image: Netflix

Netflix has released its Q2 2022 financial results, and things aren’t as gloomy as the streamer had originally predicted.

In its letter to shareholders, Netflix revealed that it had lost around 970,000 subscribers during the second quarter. This isn’t something that would normally be worth celebrating, but it’s being regarded as a win by some investors, as the streamer had previously projected much higher losses in the realm of 2 million.

Netflix described its membership growth as being “better than expected” in the opening of its letter, confirming solid Y/Y revenue growth, although not as great as previous quarters, along with a commitment to shareholders about how it’ll continue to improve its business.

Q2 was better-than-expected on membership growth, and foreign exchange was worse-than-expected (stronger US dollar), resulting in 9% revenue growth (13% constant currency). Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our product, content, and marketing as we’ve done for the last 25 years, and to better monetize our big audience. We’re in a position of strength given our $30 billion-plus in revenue, $6 billion in operating profit last year, growing free cash flow and a strong balance sheet.

Netflix goes on to confirm that it will be launching a new ad-supported tier of its streaming service relatively soon, which is no longer a surprise to those who have kept up with recent announcements, including those involving Microsoft. The new ad-supported tier is slated to launch early next year, according to a portion of the letter that explains why Netflix decided to collaborate with the Windows maker.

We recently announced Microsoft as our technology and sales partner and we’re targeting to launch this tier around the early part of 2023. They are investing heavily to expand their multi-billion advertising business into premium television video, and we are thrilled to be working with such a strong global partner. We’re excited by the opportunity given the combination of our very engaged audience and high quality content, which we think will attract premium CPMs from brand advertisers.

Netflix currently has 220.67 million subscribers, and it expects to add around one million in the third quarter.

One of the ways that Netflix plans to grow its revenue and reduce password sharing is with new paid sharing plans. Already active in certain regions in Latin America, these plans allow subscribers to add extra members to their accounts for a small additional premium per month, something that Netflix hopes will allow it to better “monetize the 100m+ households that are currently enjoying, but not directly paying for” its streaming service.

Source: Netflix

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9 comments

  1. A loss of almost a million subscribers isn't anything to ignore, but coming off the pandemic, when people aren't stuck at home as much, it shouldn't be a surprise that subscriber numbers may have come down from the pandemic bubble.

    That, and Netflix was once the only game in town, now there are competitors. All things considered, this really isn't terrible given the realities of the market.

    I'm really thinking the subscription model isn't the way forward for online video content. These services would like to think that you are going to stay subscribed and just watch whatever they pump out, much like a cable subscription, but in practice that's not the way it works. When a new show comes out, people sign up, watch the season until it is over, and then drop their subscription.

    Because of this, an outright sale model makes a lot more sense. Buy the shows you want, not the ones you don't, otherwise it just winds up being a dumb annoying juggling act of subscribing, dropping, and subscribing again to whatever service has the latest trending season of a show.
  2. Because of this, an outright sale model makes a lot more sense. Buy the shows you want, not the ones you don't,
    Kinda.

    One off movies, yeah, I'd rather just rent/buy them than subscribe then have to resubscribe.

    But the sub once in a while, binge like there is no tomorrow, then unsub before you forget about it -- if you let the shows you want kinda build up a bit, you can get an awful lot in there for one or two month's cost.

    I can kinda see it both ways, and do both of them depending on if I'm willing to let the show park until I get back to the service, or if I'm hyped enough about it to jump on it early.
  3. 970K is a big number, but what does that represent percentage-wise?

    Other sites are reporting a 1.3 million subscriber drop, so there appears to be some confusion over the numbers. Maybe it is U.S. vs Worldwide?

    Either way:

    Netflix now reports it has 73.28 million paid subscribers in the US and Canada and 220.67 million worldwide.
  4. Yup! I'm extremely proud to say that we, and many of our family and friends, are apart of that 900k+ lost subscribers.

    Good riddance! 🎉
    Same here. 🥳
  5. Yup! I'm extremely proud to say that we, and many of our family and friends, are apart of that 900k+ lost subscribers.

    Good riddance! 🎉
    Same here. 🥳

    Me three.

    (though I canceled mine years ago)
  6. I've never been a subscriber to any streaming service (I prefer to run media from local storage), but I dabbled with Netflix when my family had a shared account. The low video and audio quality combined with shows/movies being rotated out meant I didn't try it for too long before I went back to my usual ways. I think my sister and her husband got Disney+ through some kind of FiOS package or some sh1t, but I've never tried using it. Don't know if they still have it (I doubt it). I don't know if anyone in my family still subscribes to Netflix. I'd be surprised if they did. I don't think they use any of the other streaming services. Call me crazy, but cuz I grew up in a time where A.) we didn't have Internet, B.) we didn't have always-on Internet, I still tend to not rely on sh1t that requires an Internet connection, if I can help it. I like software and media I can use completely offline.

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