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Netflix subscribers in the US and Canada have dropped by 1.3 million over the past three months.

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After Netflix reported losing subscribers for the first time in more than a decade last quarter, the company’s second-quarter earnings report showed a 1 million drop in subscribers worldwide, including a 1.28 million drop in the US and Canada alone. between the end of March and the end of March. end of June. That’s better than his forecast of losing 2 million subscribers worldwide, but the shortfall in the US and Canada is double the 600,000 reported in the first quarter. Now Netflix says it has 73.28 million paying subscribers in the US and Canada and 220.67 million worldwide.

It comes almost a week after Netflix announced a partnership with Microsoft on a cheaper, ad-supported tier, which it plans to launch by early next year. In the letter, Netflix emphasizes that its current plans will remain commercial-free. Netflix executives remain optimistic about the ad-supported tier’s prospects, noting that “over the long term, we believe ads can deliver substantial membership growth (through lower prices) and revenue growth (through ad revenue).”

The plan is to roll it out to markets where advertisers spend the most money in the first place. Netflix executives write, “We hope to create a better-than-linear TV advertising model that is more convenient and relevant for consumers and more effective for our advertising partners.” Netflix adds that watch times have also increased. This points to a study by research firm Nielsen which found that Netflix’s share of U.S. TV viewing rose to an all-time high of 7.7% in June 2022, up from 6.6% last June.

Revenue increased 9 percent year-over-year from $7.3 billion in 2021 to $7.97 billion this quarter. While the streamer has experienced a couple of disruptions in recent months, including two separate layoffs affecting hundreds of workers, there is some good news. Episode 4 of the series very strange things lifted the series to second place in popularity on the service, behind only the Korean-language hit. squid game, which Netflix announced in June, will return for a second season. Netflix’s earnings report also revealed that the company has acquired Animal Logic, the animation studio behind Lego Movie.

Ad-supported tiering is just one of the ways Netflix is ​​exploring to counteract falling subscriber numbers; it’s also part of the company’s efforts to preserve the ones it already has. But Netflix also wants to lock in non-paying subscribers and blamed password sharing in part for the initial drop in subscribers last quarter.

Netflix executives say they are working on finding an “easy-to-use paid-sharing offering” that is scheduled to launch in 2023. In March, Netflix conducted tests in Chile, Costa Rica and Peru that should allow users to add additional accounts for users outside of the primary account holder’s household. This week, Netflix expanded its anti-password-sharing efforts to allow users in Argentina, El Salvador, Guatemala, Honduras and the Dominican Republic to purchase an additional “home” located outside of the main household where they can use Netflix on all devices.

Perhaps one of the biggest threats Netflix faces is increased competition from new players in the streaming industry such as Disney Plus, Paramount Plus and HBO Max. Paramount Plus grew to nearly 40 million subscribers last quarter, HBO and HBO Max added 13 million more subscribers, and Disney Plus also added 8 million new subscribers. Disney Plus already has plans to launch an ad-supported tier later this year, and will also use live streaming for certain series such as Dancing with the Stars is something that Netflix is ​​currently in the process of testing.

Netflix is ​​likely to reveal more information during a earnings video call at 6pm ET on its Investor Relations YouTube channel.

Disclosure: edge recently released a series with netflix.

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