Netflix reported a 970,000 subscriber loss in the second quarter, exceeding expectations of a 2 million loss.
Although the quarter ended with a net loss of subscribers, the streaming behemoth expects to add 1 million subscribers in the third quarter.
Remember that Netflix addressed slow revenue growth in the second quarter, blaming it on competition, account sharing, and other factors like slow economic growth and the Ukraine war.
While the streaming service has not commented on the recent drop in subscribers, experts believe it is due to the proliferation of streaming services. As more studios introduce their streaming platforms, like HBO Max, Disney+, Hulu, and Amazon Prime Video, Netflix's library of movies, series, and even games will be limited.
One of the options Netflix is considering to compensate for a drop in subscribers is an ad-supported tier. Advertisements are also part of its efforts to retain the ones it already has.
However, the streaming platform wants to keep unpaid subscribers, and it blamed password sharing for a portion of its initial drop in subscribers last quarter.
Netflix lost the most subscribers in the United States and Canada, losing 1.3 million. In Europe, the Middle East, and Africa, the company lost 770,000 subscribers while gaining 1000 paying subscribers in Latin America.
The Asia-Pacific region contributed the most to Netflix's subscriber growth during the quarter, bringing in 1.08 million new subscribers.
The platform has also taken steps to monetise password sharing by charging primary account holders a fee to add users outside their households.
In Argentina, the Dominican Republic, El Salvador, Guatemala, and Honduras, the company will introduce an additional fee structure in August 2022 that will allow users to add an additional "home" account outside their primary account for $2.99 per month.
Globally, Netflix expects to "find an easy-to-use paid sharing offering" based on these two approaches by 2023.
The streaming giant’s net profit was $1.44 billion in the second quarter, up 6.5% from $1.35 billion in the previous quarter. It did, however, state that it expects revenue growth to slow to 4.5% by the third quarter.