The king of streaming didn’t seem overly concerned today when it talked about losing close to 1 million subscribers from April to July on an earnings call.
Chief Executive Reed Hastings said the company was prepared to lose more subscribers than that, perhaps even close to 2 million. Still, this is the biggest loss of user base that Netflix Inc. has ever experienced. The company said things should turn brighter when it introduces its ad-supported model with Microsoft Corp. and develops new ways to crack down on people sharing accounts.
Nonetheless, things have not been going so well for the streaming for some time. Earlier this year, the company announced that it would be cutting hundreds of jobs. This came after its shares took a fall when it was announced there had been the first loss of subscribers in the past 10 years.
The good news was that Netflix saw a 9% increase in revenue, to $7.9 billion. “It’s tough losing 1 million subscribers and calling it a success,” Hastings said, but he added that the results were “less bad” than they could have been. He said part of the reason for that was the popularity of the hit show “Stranger Things.”
Why Netflix seems to be floundering at the moment is likely a consequence of there just being so many competitors, although the service has struggled to find success with other shows recently besides “Stranger Things.” Its recent addition to the “Resident Evil” franchise couldn’t have bombed more regarding user reviews, despite some positive reviews in the media.
In recent awards ceremonies, the proof was there, with Netflix’s competitor HBO coming out a clear winner. HBO will soon release “House of Dragon,” while Amazon will put out “Lord of the Rings: The Rings of Power.” Netflix might not be able to compete against that. In a letter to investors, Netflix seemed to play down the losses, saying unlike other companies that offer streaming services, it can concentrate on one revenue line.
“This freedom means we can offer big movies direct to Netflix, without the need for extended or exclusive theatrical windows, and let members binge-watch TV if they want, without having to wait for a new episode to drop each week,” the company said. “This focus on choice and control for members influences all aspects of our strategy, creating what we believe to be a significant long-term business advantage.”