Netflix announced that its brand had lost almost 1 million subscribers during the second quarter. According to Netflix, the brand lost approximately 200,000 subscribers in the first 3 months of this year and almost 1 million by the end of the first quarter of the year. This was the first time that the subscriber count had fallen to such drastic levels in almost a decade, which caused the stock to post its biggest 1-day percentage failure since 2004.
Despite the huge drop in subscriber count, the Netflix brand states that its revenue has grown in the last 3 months by 9% to reach $7.9 billion. To recover some of the losses, Netflix states that it intends to do everything possible to attract at least 1 million subscribers in the next quarter. So far, Netflix boasts at least 200 million subscribers all over the world and is one of the biggest streaming services in the globe.
In a letter addressed to shareholders, Netflix claimed that it intended to maintain its focus on supplying customers with streaming content rather than attempt to source additional revenue streams like it has in the past. With this freedom, the brand will be able to direct more movies without having to deal with extended or exclusive theatrical windows. Ultimately, this will also mean that Netflix customers will now be able to go back to the binge-watching model, without having to wait days for the release of a new episode per week.
Over the last 3 months, Netflix has been hard at work adjusting its business model so that it can more effectively meet the challenges that it is facing while maintaining a competitive edge. For instance, it recently fired about 450 employees to cater to the rising operational costs. The brand also said that it planned to introduce a less costly subscription tier that is expected to include ads, therefore effectively revering its original stance of always providing customers an ad-free experience.
Netflix intends to introduce the low-cost advertising tier much later in 2023 in just a handful of markets. This new model will allow the brand to attract much-needed new subscribers while also introducing a new revenue stream from advertisers that are keen on reaching Netflix’s broad range of audiences.
Netflix also announced plans to crack down on password sharing as a means of dealing with close to the 1oo million individuals that have been accessing the platform without paying for it.
