Netflix Q2 Subscriber Loss Widens But Not As Much As Feared

Netflix lost over one million subscribers during the spring due to increased competition and skyrocketing inflation that is straining household budgets, emphasizing the need for the video streaming service to provide a cheaper option with commercial breaks.

Photo Insert: Netflix got a boost from the fourth season of its hit show, Stranger Things, which has received 1.3 billion hours of viewing.

The April-June decrease of 970,000 accounts, reported Tuesday as part of Netflix's second-quarter financial report, represents the company's greatest quarterly subscriber drop in its 25-year history.

It could have been much worse, though, given that Netflix management predicted a loss of 2 million customers during the second quarter in April.

The enduring popularity of "Stranger Things," Netflix's 2016 science fiction/horror series, likely prevented the streaming service from incurring more losses. In the four weeks following the release of the fourth season of the series in late May, Netflix reported that viewers viewed a total of 1.3 billion hours of it — more than any other English-language series in the service's history.

The less severe decline in subscribers, along with a projection for a return to growth in the July-September period, aided in a 7 percent increase in Netflix's shares in extended trading following the release of the results.

Despite the economic slump, Netflix made $1.4 billion, or $3.20 per share, during the quarter, a 6 percent gain over the same period last year. Compared to the same period last year, revenue increased by 9 percent to approximately $8 billion.

Netflix completed June with 220.7 million subscribers worldwide. Netflix's management estimated that the service will gain approximately one million users between July and September, indicating that the worst of its slump may be over.

Despite the fact that Netflix's subscriber losses were not as severe as investors and management feared, the drop served as a stark reminder of the problems now facing the Los Gatos, California-based firm after a decade of uncontrolled development. This year, Netflix's stock price has dropped by roughly 70%, wiping off approximately $180 billion in shareholder equity.

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