From The Verge: After Netflix reported losing subscribers for the first time in over a decade last quarter, the company’s Q2 earnings report revealed the number of worldwide subscribers dipped by 1 million, including a drop of 1.28 million in the US and Canada alone between the end of March and the end of June. That’s better than its projection of losing 2 million worldwide, but the subscriber shortfall in the US and Canada is double the 600,000 drop it reported for Q1. Netflix now reports it has 73.28 million paid subscribers in the US and Canada and 220.67 million worldwide.
This comes nearly a week after Netflix announced a partnership with Microsoft on its cheaper ad-supported tier that it expects to launch by early next year. In the letter, Netflix emphasizes that its current plans will remain ad-free. Netflix execs remain optimistic about the prospect of an ad-supported tier, noting that “over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”
The plan is to roll it out in the markets where advertisers spend the most money first. The Netflix executives write, “Our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners.” However, not all of its content will be available on its ad-supported plans due to content licensing agreements. During an earnings call, Ted Sarandos, Netflix’s co-CEO and chief content officer stated that the company “will clear some content, but certainly not all of it” by the time the new tier launches.
Netflix adds that viewing time has increased as well. It points to a study done by research firm Nielsen that found Netflix’s share of US TV viewing rose to an all-time high of 7.7 percent in June 2022 when compared to 6.6 percent last June.
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