But the data revealed by Netflix on Tuesday was not all bad, as the company was originally projected by some to lose up to 2 million subscribers over that same three-month period.
Wall Street reacted to the mixed news by sending Netflix’s share price up 7 percent in after-hours trading, with one share of Netflix priced at $216, about $15 higher than its close price of $201. The stock is still down 62 percent compared to where it was priced this time last year, according to Google Finance.
Investors appeared encouraged by the lower-than-expected subscriber loss logged by the streaming company on Tuesday, coupled with optimism from executives that things are headed for a turn-around.
“Our challenge and opportunity is to accelerate our revenue and membership growth,” a Netflix spokesperson wrote in a note to investors that was published with its quarterly earnings report on Tuesday.
Netflix faces increased competition from legacy brands like the Walt Disney Company, Warner Bros Discovery and Paramount Global that have entered the streaming space with their own products in recent years. All three have moved away from licensing their more-premium content to Netflix and other rival services as they build out their own in-house streaming services, which has caused Netflix to lose popular movies and TV shows.
Many of those companies make it easy for customers to switch, too, since they’re priced lower than what Netflix charges. Paramount Global, for example, operates Paramount Plus, which costs $5 a month with advertisements or $10 a month without. Both Paramount Plus plans allow users to stream content in high definition; Netflix, on the other hand, charges $15.50 for access to HD movies and TV shows.
One way the company is hoping to add more subscribers is through the introduction of a cheaper subscription tier that is offset by short commercial interruptions. Earlier this month, the company announced it had tapped Microsoft to serve as its technology and sales partner for the cheaper version of the service.
Another way Netflix is trying to generate more revenue is by cracking down on password sharing, reversing a position once held by key executives who claimed the practice was good for business. The company estimates around 1 million streamers are accessing Netflix without paying for it. In some countries, Netflix is asking users to pay extra when they share their password with freeloaders who don’t live at the same address.
Three months ago, Netflix said it had lost 200,000 more subscribers than it gained between late December 2021 and late March 2022. That number spooked investors, causing its stock price to plummet. Job losses soon followed, with Netflix laying off around 5 percent of its global workforce, the Wall Street Journal reported.