Netflix announced on Tuesday, July 19, 2022, that it lost 970,000 members from April to June, escaping the worst-case scenario projected by the business, although it issued lower projections for the current quarter than Wall Street forecasts.
The online streaming company intends to launch a new ad-supported subscription category next year, but has cautioned that the increasing dollar is reducing revenue from international users.
Netflix warned in April that it projected to lose two million users in the current quarter, which stunned "Wall Street" and sparked concerns about the company's long-term growth prospects. While the number of consumers lost in the second quarter was lower than predicted, it was nevertheless a loss. The number of new consumers is expected to surpass one million between July and September.
According to Refinitiv surveyed Wall Street experts, 1.84 million additional subscriptions were expected.
In a statement to shareholders, the business stated that it had further investigated the slowdown, which it linked to a range of issues such as password sharing, competition, and economic slump. With approximately 221 million customers worldwide, Netflix is the biggest streaming provider.
Netflix dilemmas that keep coming up
This occurs at a time when the global network is in crisis after achieving fantastic profits thanks to the worldwide quarantine imposed by Corona. The company recently laid off 150 employees, or nearly 2% of them, in an effort to save money in response to the slowdown in the growth of the broadcasting sector. Following, he saw a huge boom.
"These changes are driven more by the needs of the company than the individual performance (of employees), which makes them especially difficult because none of us want to leave us colleagues so great," the spokesman said, adding that the layoffs amounted to about 150. Most of them are in the United States, noting that Netflix has also reduced its expenses in terms of services provided by third parties.
A corporate representative stated that "the slowdown in our revenue growth dictates that we cut down the rise of our costs as a company" in addition to noting that Netflix had earlier disclosed that it was losing members for the first time in more than ten years.
With 221.6 million members at the conclusion of the first quarter, Netflix had slightly fewer subscribers than it had at the end of December. Netflix ascribed this reduction to the suspension of its services in Russia following the invasion of Ukraine.
Following the release of the quarterly results in April, this decrease of 200,000 members, or less than 0.1 percent of its total users, sparked a panic on Wall Street.
At the time, Netflix's CFO Spencer Newman said on a conference call that the company will continue to invest billions of dollars in the platform while "reducing" its expenditures over the following two years.
Within the first three months, the Silicon Valley-based company's net sales were $ 1.6 billion, down from $ 1.7 billion in the corresponding period of 2021. Netflix blamed the fall in subscribers in part to consumers sharing their accounts with other people. Others live alone.
Netflix claims that although about 222 million households pay membership fees, more than 100 million families that do not use the service still have access to the same accounts.
The fierce rivalry Netflix faces from "Apple" and "Disney" is also detrimental to its expansion
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