Netflix loses nearly a million subscribers as cost-of-living crisis hits budget | Business newsletter
American streaming service Netflix has revealed that it lost nearly a million subscribers in the last three months of its fiscal year as the global cost of living crisis hit home entertainment budgets.
The company, which reports it had less than 970,000 customers during the period, warned in April that the number could stretch to two million as a series of challenges face the business.
However, they say they are forecasting a return to subscriber growth in the current quarter.
That effort will be supported from next year, Netflix said, through the launch of a new, cheaper service that will be supported by ads and through new contracts with many households.
The earnings report covering the second quarter to the end of June was eagerly awaited by investors after a bloodbath for its shares when it reported shock absorber – for the first time in a decade – in the January-March subscriber base.
After that, the number of customers dropped by 200,000 as the company predicted 2.5 million new customers.
The numbers should have been in positive territory but for Netflix’s decision to suspend services in Russia in retaliation for the war in Ukraine.
However, the stock fell by as much as 40% when Netflix forecast that it will continue to drop subscribers amid stiff competition and pressure on disposable household income across its markets due to rising inflation.
Netflix has responded to the revenue squeeze by raising prices in key markets, including the US and UK, and by restrain people from sharing passwords with other households.
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As part of those efforts, the Squid Game and Stranger Things streamer has moved to create a multi-household subscription service, which will start in South and Central America.
It is also working with Microsoft to create a cheaper plan that contains advertising to reduce costs for consumers.
Revenue for the March-June period came in at just under $8 billion — just because of analysts’ lower expectations.
Shares, which have lost two-thirds of their value this year amid a pullback for so-called general growth stocks in a high-inflation environment, rallied more than 5% in official trading Tuesday. .
They jumped up to 8% in after-hours transactions.
The company told shareholders in a letter: “Our challenge and opportunity is to accelerate our revenue and membership growth by continuing to improve our products, content and marketing. me like we’ve done for the last 25 years and to better monetize our large audience.”
That is expected to include building on the popularity of Stranger Things, which Netflix has said it is looking to translate into a franchise.
