One million viewers abandon Netflix

Success of Stranger Things prevents even worse exodus

Stranger Things

Netflix lost a million subscribers in the three months to June as it battled to retain customers in the face of stiff competition and rising living costs.

The US streaming giant, which is responsible for popular shows such as Stranger Things, Bridgerton and Squid Game, reported subscriber numbers fell 1m between April and June as it struggled to stop the rot in viewing figures.

It marks Netflix’s second consecutive quarter of subscriber losses, following a drop of 200,000 earlier this year. The decline at the start of the year was its first fall in a decade. However, Netflix called the latest losses “better-than-expected”. 

The company cited the success of its latest season of Stranger Things for boosting retention. 

It also revealed that it planned to crack down on 100m households it estimates share a Netflix password without paying for the service. 

The technology company is facing growing competition from Disney, Apple, Paramount, Hulu and Amazon as its once dominant position comes under threat.

A cost of living squeeze is also hurting as households try to save money.

In the UK, Netflix’s share of new subscribers fell to just 4.5pc, down from 15pc in the same period last year. A Kantar report found that a third of Americans were planning to close a video streaming account in order to save money to cope with inflation. 

The results followed what analysts described as a “spectacularly bad” results day earlier this year as growth slowed at Netflix and it warned its subscriber numbers would begin to wane. 

Netflix has already lost around two thirds of its market cap so far this year, valuing it at around $90bn (£75bn), or $201 per share, on Tuesday night.

Tuesday’s fall in subscriber numbers was less than the 2m Netflix had forecast. It also predicted subscriber numbers could start to increase later this year. Shares rose 7.85pc in after hours trading. 

Revenues grew 8.8pc year on year to just under $8bn in the three months ending in June. 

Netflix has pumped billions of dollars into original shows, many produced in the UK, as it hunts for hits that can reclaim viewers from rivals. But despite spending hundreds of millions of dollars on new movies, including $200m on The Grey Man starring Ryan Gosling, many have failed to make a splash with critics.

Lavish spending on content has also left it sitting on a debt pile of $14bn.

In an effort to shore up revenues and account numbers, Netflix is considering charging customers who share their passwords an additional fee. It has begun testing the charge for some customers in Latin America. Users will be asked to “add a home” to their account, at a cost of $1.70 to use their account in another location.

Netflix is also working on an advertising supported product, which would be offered at a discounted price. The streaming company signed a deal with Microsoft to build its advertising technology. Analysts have estimated an ad-supported tier could bring in between $500m and $1.5bn per quarter.