Netflix, the globally popular video streaming application, has reported increased subscriptions despite its continued efforts to crack down on password sharing.
The company reported second-quarter financial results on Wednesday, showing a mixed situation as the platform tries to boost engagement in an increasingly competitive market. While Netflix's revenue was up 2.7% compared to last year's period, it missed estimates despite new initiatives.
Netflix Sees Jump in Number of Subscriptions
The streaming platform also guided to third-quarter revenue of $8.52 billion, just below the company's expectations of $8.67 billion. Additionally, shares extended the company's losses in after-hours trading, which dropped by 8%.
Netflix's operating margin hit 22.3% in the quarter, which exceeded its own estimation of 19%, and reiterated its full-year operating margin guidance of 18% to 20%. Despite criticism of its recent decisions, the platform had 5.89 million net additions versus the 2.1 million net additions estimated, as per Yahoo Finance.
In a statement, the streaming platform said they expect revenue growth to increase in the second half of the year as they begin to see the full benefits of paid sharing and continued steady growth in their ad-supported plan.
They added that while the company has made steady progress this year, there is still more work to re-accelerate growth. They noted that they would turn their focus on creating a steady stream of must-watch shows and movies, improving monetization, growing the collection of games, and investing more to improve the platform's services for subscribers.
A short while before the results were released, Netflix silently removed its lowest-priced ad-free streaming plan in the United States. The "Basic" plan was previously offered to American consumers for a price of $9.99 per month. It suggests a shift to support its ad tier, the plan that costs $6.99 per month.
Cracking Down on Password Sharing
The situation comes as Netflix is the first big tech and media company to unveil its latest quarterly results. According to The Guardian, it also comes amid a writers' strike that Hollywood actors have joined in to demand better work compensation and benefits.
Netflix co-chief executive Ted Sarandos said that the strike was not the outcome that the company wanted to go through. He added that the platform hopes to agree with the workers who joined the strike "as soon as possible."
The recent strike resulted from salaries and concerns over artificial intelligence (AI), which is expected to alter the industry in the next few months drastically. It resulted in pausing new seasons of global hits, including "House of the Dragon" and "The Last of Us" and various movies.
On the other hand, Netflix co-CEO Greg Peters said on Wednesday that the company would not be able to see the full effects of its new policies for several quarters. He noted that the change would not take effect overnight, partly because of interventions being applied gradually and because borrowers would not immediately pay for their accounts, said CNBC.
