Netflix loses close to one million subscribers

Netflix shed almost one million subscribers during the spring amid tougher competition and soaring inflation squeezing household budgets.

The April-June contraction of 970,000 accounts, announced on Tuesday as part of Netflix’s second-quarter earnings report, is by far the largest quarterly subscriber loss in the company’s 25-year history.

It could have been far worse, though, considering Netflix management released an April forecast suggesting a potential loss of two million subscribers during the second quarter.

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    Netflix shed almost one million subscribers during the spring amid tougher competition and soaring inflation squeezing household budgets.

    Netflix was probably spared from deeper losses by the ongoing popularity of Stranger Things, its science fiction/horror series that debuted in 2016 – that saw the rise of a number of trends and even landed Kate Bush a Number One with ‘Running Up That Hill’.

    Following the release of the series’ fourth season in late May, Netflix said, viewers watched a total of 1.3 billion hours of Stranger Things over the next four weeks — more than any other English-language series in the service’s history.

    The less severe loss in subscribers, combined with an outlook calling for a return to growth in the July-September period, helped lift Netflix’s battered stock by 7 per cent in extended trading after the numbers came out.

    Netflix co-chief executive Reed Hastings did not try to sugar-coat things during a Tuesday conference call about the results.

    “It’s tough losing a million subscribers and calling it a success,” he said.

    The company’s April-June regression follows a loss of 200,000 subscribers during the first three months of the year, marking the first time Netflix’s subscriber totals have shrunk in consecutive quarters since its transition from offering DVD-by-mail rentals to video streaming began 15 years ago.

    The loss of nearly 1.2 million subscribers during the first half of this year also provides a start contrast to the pandemic-driven growth that Netflix enjoyed during the corresponding half of 2020 when its streaming service picked up nearly 26 million subscribers.

    Despite the downturn, Netflix still earned $1.4 billion (£1.1bn), or $3.20 (£2.7) per share during the quarter, a 6 per cent increase from the same time last year. Revenue rose 9 per cent from the same time last year to nearly eight billion dollars (£6.7bn).

    A "standard" plan in the US, which allows people in the same home to watch on two devices simultaneously, now costs $15.49, up from $14 in January and just $11 in 2019.

    In the UK, basic and standard plans have both increased since January by £1 a month to £6.99 and £10.99 respectively.

    The company has increasingly faced more competition from rival subscription offerings, including Apple TV, HBO Max, Amazon Prime and Disney+.

    Guy Bisson, executive director at Ampere Analysis, told the BBC: "When you're the leader, there's only one direction to go, especially when a large amount of competition launches, which is what Netflix has seen in the last couple of years," he said.

    He added: "At some point, yes, they're going to reach a threshold where a significant number of people say enough is enough. Because of the additional choice ... price hikes are a more risky strategy."