In selected countries (Argentina, Dominican Republic, El Salvador, Guatemala and Honduras), Netflix can only be used on televisions in your own four walls from August. This restriction should not apply to mobile devices such as tablets, smartphones, but also notebooks. You should only be able to use Netflix on a TV outside of your own home for a period of two weeks (per year), for example on vacation. Customers should be able to buy up to three additional locations for just a few dollars.
The restriction is a test run in the above countries. It is currently still unclear whether and when the tightened rules will also apply in other countries.
Fight against user attrition
With this measure, Netflix wants to counter dwindling user numbers. Only thanks to series hits like “Stranger Things” did the market leader not do as badly as feared in the second quarter. The number of users fell by 970,000 paid subscriptions in these three months. The decline in customers continued, but remained below the minus of two million subscriptions expected by Netflix. Overall, the number of paid user accounts for the video service worldwide was almost 221 million in the first half of the year.
However, the outlook remains cautious. For the current quarter, Netflix only expects around one million new users. Analysts had expected more here. Sales increased in the past quarter compared to the same period last year by 8.6 percent to 8.0 billion dollars. Bottom line, Netflix earned $1.44 billion, up from $1.35 billion a year ago. However, operating income fell 15 percent to $1.6 billion.
Netflix was able to score particularly well in the most recent quarter with “Stranger Things”. The series’ fourth season was the most popular the streaming service says it’s ever aired — at least in English. Nevertheless, the company struggled in its established markets, which were characterized by increased competition from rivals such as Disney and HBO. In the US and Canada, Netflix lost 1.3 million customers. On the other hand, there was good growth in the Asia-Pacific region – also thanks to price reductions in India.
The quarterly report was well received by investors, and the stock reacted after the trading day with a jump in price of around eight percent. But even if the recently stumbling streaming service delighted its shareholders with the prospect of a return to user growth, there are still many construction sites for CEO Reed Hastings. After the weak first half of the year, Netflix is putting a lot of things to the test, including long-standing traditions. In the most recent seasons of its hit series “Stranger Things” and “Ozark”, the video service no longer released all the episodes at once, as it used to.
Hastings has already caved in to an even bigger taboo: Given the weak development in user numbers, Netflix will offer a cheaper version of its streaming service with advertising clips. In fact, Hastings had always rejected this strategy. Netflix recently chose the software giant Microsoft as a tech partner for the development of such a model. The advertising variant is expected to start in early 2023, initially in “a handful of markets”.
Source: Nachrichten
