Netflix ends its subscriber losing streak and shifts its focus to fresh revenue streams, resetting expectations
More twists than “Dahmer”… Netflix shares spiked 13% yesterday after investors learned it added 2.4M subs last quarter — its first subscriber gain of the year. Netflix had forecast adding just 1M after losing 1M through June. While profit ticked down from last year, revenue was up as subscribers kept bingeing through price hikes from earlier this year. Now Netflix will stop sharing subscriber forecasts as it focuses on revenue:
- In with the new: Next month Netflix is set to launch its $7/month ad-supported plan in a dozen countries.
- Out with the old: Netflix has said it’s going to crack down on the 100M households streaming without an account (no more mooching on your ex's password).
Checking the Netflix Top 10… for show inspo. Netflix still accounts for about 8% of Americans’ TV watch time — more than Prime Video, Disney+, and Hulu. But as budgets suffer, more US adults have canceled Netflix than any other streaming service, and a quarter of users say they’ll cancel by the end of this year. To keep subscribers loyal, Netflix is splitting up season releases of hit shows (think: “Ozark” part one). Its cheaper ad tier could help too.
Resetting expectations is key… 2.4M new quarterly subs may’ve seemed like peanuts mid-pandemic (Netflix added a record 36M subs in 2020), but the reversal bodes well for a post-lockdown future. The company knows the new normal requires moneymakers besides subscription growth. By introducing ad revenue and cracking down on password-mooching, Netflix could show investors that subscriber #s aren’t the be-all and end-all.