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Netflix just lost nearly 1 million subscribers — and we got details on Netflix with ads

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(Image credit: Tom's Guide/Netflix/Shutterstock)

BREAKING — The big bad Netflix subscriber exodus is still happening, but the company almost sounds relieved about today's news. That's because the new numbers out suggest far better results for Q2 of 2022 than Netflix had forecasted.

Remember in April when news broke that Netflix lost subscribers for the first quarter ever? Well, their expectations for today's report were far more grim than what we're seeing. 

As CNBC (opens in new tab) reports, the big red streaming machine merely lost 970,000 subscribers (per StreetAccount estimates) in the second quarter. And that might be bad — and over 400% the 200,000 subscribers it lost in Q1 — but Netflix had been expecting far worse numbers. To be specific, Netflix thought it would have lost 2 million subscribers in the last quarter.

Netflix ended its shareholder letter to investors (opens in new tab) stating "We're fortunate to be in a position of strength as the leader in streaming entertainment by all metrics (revenue, engagement, subscribers, profits and free cash flow). We're confident and optimistic about the future."

In the letter, Netflix boasted that its Q2 releases show how it aims to "satisfy a broad range of member tastes" by aiming for "unmatched variety and quality of titles." It referenced Stranger Things season 4 getting 1.3 billion hours viewed in its first 28 days, and held social media as proof of comparative success, noting "The cumulative Twitter volume for Stranger Things continues to outpace both Obi-Wan Kenobi and Top Gun Maverick, highlighting the big conversation around this title and reinforcing that our binge versus one week at a time release strategy drives lots of 'water cooler conversation.'"

Netflix's ad-supported tier won't be everywhere all at once

Interestingly enough, Netflix announced that its ad-supported tier — which won't interfere or change anything about its other tiers — won't roll out all at once.

In the letter to shareholders, Netflix states "We’ll likely start in a handful of markets where advertising spend is significant," which sounds like larger markets such as the U.S. (or New York, to be more granular) may see an ad-supported option before others. 

Netflix will then evolve it, noting "Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering. So, our advertising business in a few years will likely look quite different than what it looks like on day one."

Analysis: Netflix is fighting user loss by asking for more money again

We may see Netflix's problem as user retention, but the company sees things in a more black and white profit and loss way. Or at least that's what it looks like when Netflix's password-sharing crackdown is one of its biggest changes in the moment is taking this moment to continue to crack down on account sharing. Yes, the company that said true love is sharing your Netflix password changed its mind.

But Netflix isn't framing it as a crackdown on account sharing, but that it's offering a "paid sharing" plan. The letter to subscribers notes that the company is looking to "monetize the [more than 100 million] households that are enjoying, but not directly paying for, Netflix."

In fact, it seems like this strategy is working right now, as the company said it's "encouraged by our early learnings and ability to convert consumers to paid sharing in Latin America." The letter also suggests 'paid sharing' or something like it will be hitting Netflix next year, stating "Our goal is to find an easy-to-use paid sharing offering that we believe works for our members and our business that we can roll out in 2023." 

Which is interesting, because one would assume asking for more money — such as with Netflix's recent price hike — pushes people away.

Next: Here's how you can disable autoplay previews on Netflix.

Henry T. Casey
Henry T. Casey

Henry is a senior editor at Tom’s Guide covering streaming media, laptops and all things Apple, reviewing devices and services for the past seven years. Prior to joining Tom's Guide, he reviewed software and hardware for TechRadar Pro, and interviewed artists for Patek Philippe International Magazine. He's also covered the wild world of professional wrestling for Cageside Seats, interviewing athletes and other industry veterans.