This week’s biggest story from the business of entertainment came out of Netflix and its highly anticipated Q2 earnings announcement on Tuesday. The company reported a net loss of just under one million subscribers for the quarter, significantly better than original projections which had expected a decline of two million subs. Strong viewership for the fourth season of Stranger Things and original films such as Adam Sandler’s HUSTLE partially offset the negative market factors that had led to the original projection.
Netflix stock moved higher on the news, after having crashed three months ago after the company surprised investors with worse-than-expected Q1 earnings. But Netflix CEO Reed Hastings summed up the mood by saying, “It’s tough losing one million subscribers and calling it a success.”
A number of factors are dragging down Netflix’s financials. The strengthening of the U.S. Dollar against other global currencies is limiting profits from international markets, which account for more than 60% of Netflix’s gross revenue. Another factor is a perceived decline in the quality of Netflix’s original content. HBO Max garnered more award nominations than Netflix, despite having fewer titles. This is said to reflect Warner Bros. Discovery CEO David Zaslav’s mentality of focusing on quality over quantity. While HBO Max has inked content deals with trendy brands such as A24, Netflix’s in-house productions may be losing some of their lusters.
Netflix has announced plans to drive new revenues by offering a less expensive, ad-supported tier of service in 2023, and by cracking down on rampant password sharing among its customers, beginning in Latin America. Netflix projects that it will see growth once again starting in the third quarter, which would be a welcome sign that the company has weathered the most recent downturn in its fortunes.
See Also: Netflix Says It Lost Nearly 1 Million Subscribers, and Breathes a Sigh of Relief (NY Times) and HBO Max To Add Massive Collection Of A24 Films In August 2022 (Screen Rant)