Netflix D-day.
The company’s second since streaming services surprised Hollywood and Wall Street in April, losing 200,000 subscribers in the first quarter and another 2 million in the second quarter. The quarterly earnings report was enthusiastically expected. Suspense ends Tuesday afternoon when the report comes out.
Over the past three months, Netflix has coordinated its business to better address the challenges it expects to face for the rest of the year. The company has fired about 450 employees. It has announced the introduction of a new, cheaper subscription layer featuring advertising — reversing the long-standing stance of never having commercials for its services. He also said that password sharing will be cracked down more strongly. This is another reversal that has been felt by many as long-awaited.
The company has 221.64 million subscribers and believes that there are tens of millions of people sharing passwords rather than signing up for their subscription.
Netflix has less emmy awards this month than its main rival, HBO, despite having more programming than the cable network and its streaming derivative, HBO Max, in addition to business issues. Was nominated for. HBO has won 140 nominations for Netflix 105. This is an indicator that emphasizes the difficulty of continuously producing high-quality, topical entertainment.
With all the news, Wall Street suffered from streaming giants, with Netflix’s share declining 46% from its April earnings report and nearly 70% from the beginning of the year.
“In almost every deadlock we’ve faced, the company has found a way to maneuver safely before hitting a wall,” said Michael Nathanson, senior analyst at Moffett Nathanson, after the first quarter earnings report. I am writing in a letter. “But this time it feels different. In the first quarter 2022 earnings announcement, investor letters and videos portray a company that is surprised and less clear about its future direction. did.”
Most analysts predict that despite Stranger Things’ season four performance, second-quarter subscriber losses are likely to be in line with Netflix’s forecasts. Analysts also predict that the rest of the year will be tough as additional subscribers leave the service now that the latest season for Stranger Things is over. Fear focuses on the idea that Netflix maximizes subscriber growth in the United States and Canada and exaggerates initial expectations of how it will grow in other parts of the world.
As an example, Nathanson reduced Netflix’s total potential market to 400 million subscribers worldwide, instead of the one billion that the company often said it would reach.
Analysts welcome the introduction of a new ad layer, a service provided by Microsoft, but the introduction of lower-priced options could prey on subscriptions from the more expensive commercial free layer. I have a concern.
“To get back the lost revenue, we need to generate a lot of ads,” said Benchmark analyst Matthew Harrigan.
