Netflix outpaced its own gloomy quarterly forecasts, stemming subscriber losses and posting higher revenue despite a more competitive streaming landscape and challenging economic environment.
The company’s financial results, released after Tuesday’s market close, were widely anticipated. Though the loss of 970,000 paying users might typically not pass for good news, it’s a veritable win compared with the 2 million the company had expected for the three-month period that ended June 30. That sent investors rushing in, powering the stock up nearly 8 percent in after-hours trading.Shares surged 5.6 percent ahead of Tuesday’s release, closing at $201.
To beef up sales, the company said it will focus on evolving and improving its revenue lines, including a widely anticipated ad-based subscription plan and clamping down on free password sharing. In addition to considering lower-cost plans, Netflix is also trying to wring money out of the 100 million households that share passwords and access the service without paying. The company is expanding efforts to charge subscribers an extra fee to view content from outside their primary residence. The company said its goal is to release a paid sharing offering in 2023.
Meanwhile a host of competitors are vying for attention and streaming dollars. Disney Plus, Prime Video, HBO Max and Paramount Plus helped transform the streaming world, leaving consumers to manage multiple subscriptions if they want to watch hit television shows scattered across services.“They are losing subscribers in the US and Europe because of competition, recession, inflation, and general fears about the economy.” said Michael Pachter, an analyst for Wedbush Securities.
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