Netflix has reportedly lost nearly 1 million subscribers in the second quarter, but one media analyst considers the loss a net positive.
According to Santosh Rao, head of research at Manhattan Venture Partners, the report is good. Amid Netflix’s highly anticipated second-quarter earnings, where analysts had earlier expected the company to lose 2 million subscribers, losing 970,000 subscribers is way better than those figures. It should be recalled that the video streaming giant lost 200,000 subscribers in April and has struggled to attract new subscribers to the platform since then, especially after announcing that it is working on adding ad support to its services.
Experts are now blaming the company’s woes on increased competition and predicting a streaming recession in the coming years. Speaking on the recent loss of subscribers, Netflix co-CEO Reed Hastings admitted that although losing a million subscribers is tough, he called it a success in disguise and added that the company is set up really well for the next year.
Expectations for Q3, 2022
Despite losing a million subscribers in Q2, the company anticipates moderate Q3 subscriber guidance, with Netflix expecting 1 million net additions in the current quarter, a little below Wall Street’s estimate of 1.9 million.
While the company’s subscriber loss took the spotlight, it’s important to add that Netflix’s Q3 revenue guidance came in lighter than expected at $7.84 billion, slightly lower than the estimated $8.2 billion. Another thing that has weighed on the company’s Q2 performance is increased foreign exchange pressures.
While the company continues to slug it out with these microeconomic challenges, Rao expects the subscriber frenzy to settle, with the company arising out of its current challenges. He further predicts that Netflix will continue to stand out from the pack, given its strong global presence. As the company continues to crack down on password sharing, analysts predict the company will boost its revenue.
While many subscribers have kicked against Netflix’s idea of launching ad support, the company has remained adamant about the move believing it will generate more revenue for the company.