Netflix shared its second quarter 2022 earnings Tuesday, confirming it lost even more subscribers despite releasing new episodes of Stranger Things. Although the streamer lost 970,000 more subscribers than it was expecting, this was still a significant decrease from the 2 million subscribers Netflix had expected to lose. Netflix’s first quarter earnings shocked Hollywood with a loss of 200,000 subscribers. It raised questions about the future prospects of the streaming service and led to a series high-profile cost-cutting efforts.
According to the streamer’s quarterly earnings reports to shareholders, it currently has 220.67million subscribers worldwide and expects to report a gain in the third quarter. Variety. Netflix anticipates adding 1 million subscribers between July 1 and September 30, 2022. In Russia, Netflix lost 700,000. This was after it pulled its service due to the invasion.
Netflix lost 1.3million subscribers in the U.S., Canada, and Europe during the second quarter. Latin America was flat. In the Asia Pacific region, however, 1 million new subscribers were added. Netflix reported a 8.6% increase in revenue over the second quarter 2021. Netflix reported an operating income of $1.6 billion for the second quarter and a net income of $1.4 billion.
Netflix announced that it was cutting jobs and cancelling many projects following the quarter’s first quarter report. Netflix reported a $70m loss in subscribers, and claimed it was adjusting its operating model. “for slower top-line growth,”Reports Variety. Netflix also had a $80 million non cash impairment charge “certain real estate leases primarily related to rightsizing our office footprint.”
Netflix stated to shareholders that they have made progress in solving its greatest problem, password-sharing. They launched paid tiers in certain markets for households who share passwords. Mircosoft and Netflix began to work together on a new ad supported tier that they hope will launch in the early 2023.
The streaming service also said that it does not intend to change its plans to create more original content to avoid having to deal with rival distributors. Netflix doesn’t want to be in a situation where a show is like this. The OfficeOder Seinfeld Netflix’s content will be overshadowed by its competitors before they go. Netflix wants subscribers stay. Stranger ThingsPlease do not sign up Seinfeld And then, you can leave. Seinfeld does.
“We’re now more than a decade into transforming our service from licensed second run content to mostly Netflix originals – including more than five years into building out our internal studio to produce the majority of our original titles (60% of our net content assets on our balance sheet are Netflix-produced),”Netflix wrote to shareholders. “We’re now through the most cash-intensive part of that transition. As a result, our cash content spend-to-content amortization expense ratio peaked at 1.6x (along with peak negative FCF of -$3.3B in 2019) and is expected to be about 1.2-1.3x in 2022 and to decline going forward, based on our current plans, which assume no material expansion into new content categories in ’23.”