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Netflix limits its losses to one million subscribers in the 2nd quarter and expects a rebound

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The pioneer of the sector announced on Tuesday that it had lost 970,000 subscribers between the end of March and the end of June, instead of the two million it expected.

It’s not easy to talk about success when you’ve lost a million of customers, acknowledged Reed Hastings, the co-founder of Netflix.

But we are well prepared for next yearhe added during a conference call.

The service, which now has 220.67 million paying subscribers worldwide, was largely disappointing in the first quarter. He then admitted to losing subscribers for the first time in 10 years.

A sign that Tuesday’s news reassured the market, its stock rose more than 7% in electronic trading after the close of the New York Stock Exchange.

The Californian group published a turnover of 7.97 billion dollars for the period from April to June, a result lower than expectations, which it put in particular on the account of an unfavorable exchange rate.

On the other hand, it made 1.44 billion in net profit, better than expected.

These performances show that Netflix is ​​not likely to go out of business just yetreacted the independent analyst Rob Enderle.

They bought time, what they need to stop the bleeding subscribers, he continued.

Netflix expects to regain one million subscribers in the third quarter and thus reach 221.67 million paying subscribers. A figure nevertheless still below that of the end of 2021.

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Netflix is ​​still the leader

To achieve this, the platform is counting in particular on the success of the fourth season of the science fiction and teenage adventure series. Stranger Thingswhich has just concluded, and also on the imminent release of The Gray Mana film by the Russo brothers, the directors of avengers :Endgamewhich could turn into a franchise if it wins over the public.

1.3 billion hours on the clock for season 4 of Stranger Things“,”text”:”With 1.3 billion hours on the clock for Season 4 of Stranger Things”}}”>With 1.3 billion hours on the clock for season 4 of Stranger Thingsnoted Neil Saunders, the director of GlobalData.

Nevertheless, the Netflix model is not as relevant to generating growth in a changing economy and consumer societyhe added.

After years of rapid conquest, and after taking full advantage of the pandemic and health restrictions, Netflix is ​​undergoing a correction effect, amplified by competition, which has saturated the market in recent years. Added to the loss of subscribers is an unfavorable economic context, from the war in Ukraine to inflation and the strong dollar.

Netflix remains the streaming leader, but unless it finds more franchises that resonate widely, it’s going to end up struggling to stay ahead.said Ross Benes, analyst of eMarketer.

In the first quarter, the service had lost 200,000 subscribers worldwide compared to the end of 2021. The news had plunged its price by 25%.

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Use of advertising

The bosses of the platform then announced, in April, their intention to offer a cheaper subscription formula, but with advertising, after years of refusing this less prestigious solution.

Given the strong demand from brands, this product should increase their revenue per user. But there’s no evidence it’ll slow subscription cancellations or attract enough new consumers.underlined Ross Benes.

Last week, the company clarified that the new subscription would be in addition to the three options already available (Essential, Standard and Premium), with the cheapest being $10 per month in the US. But she did not give a date. According to the New York Timesdeployment could begin as early as the end of the year in some countries.

In April, Netflix also indicated that it was going to tighten the screw on the side of the sharing of identifiers and passwords, which allow many people to access the content of the platform without paying.

We will have something that we can implement next year as plannedconfirmed Greg Peters, the director of operations.

The slowing growth of the platform has also resulted in the layoff of more than 400 employees during the past quarter, mainly in the United States.

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