Netflix has followed a bleak first quarter marking its first loss of subscribers in 11 years with even worse news. During its latest quarterly report, the streaming giant revealed a loss of an additional 970,000 worldwide subscribers.
Breaking down the subscriber change by region, Netflix lost 1.3 million in the US and Canada; dropped another 770,000 in Europe, the Middle East, and Africa; held steady in Latin America; and gained one million in Asia. The losses don’t come as a surprise, but actually beat the company’s previous estimate back in April that it would shed two million total customers during the second quarter.
In a letter to shareholders, Netflix revealed it currently has 73.28 million paid subscribers in the US and Canada and 220.67 million worldwide. The company also projected the addition of one million subscriptions for the third quarter.
Netflix’s strategy to reverse the downturn includes expanding a password-sharing fee to more countries in Latin America and introducing an ad-supported tier at a lower price than its current plans. With the company already having selected Microsoft as its advertising partner, the new option is expected to launch “in the early part of 2023.”
“We’ll likely start in a handful of markets where advertising spend is significant. Our intention is to roll it out, listen and learn, and iterate quickly to improve the offering,” Netflix executives wrote. “Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners. While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues).”
One bright spot for Netflix has been the runaway success of Season 4 of Stranger Things, which became its most-watched English-language original series according to proprietary metrics and spawned the resurgence of songs like Kate Bush’s “Running Up That Hill” and Metallica’s “Master of Puppets.”
Though the series has come to a close, Stranger Things creators The Duffer Brothers aren’t going anywhere. Their production company Upside Down Pictures has plans for a Stranger Things stage play, a loosely-connected spinoff, a series adaptation of Stephen King and Peter Straub‘s 1984 novel The Talisman, and a live-action Death Note series — all of which will feature Netflix’s involvement.