Netflix’s second-quarter earnings made it the center of media attention, much of which celebrated its lower-than-projected subscriber losses.
What the media applauded was Netflix losing just 970,000 subs worldwide rather than 2M subs as it had cautioned Wall Street to expect. That looked like good news to some, but a closer look suggests other possible conclusions.
While 930,000 subs were lost globally, erosion in the U.S. & Canada was 1.3M high-priced subs. Standard domestic subs cost nearly $16 monthly and are reportedly the most popular tier. This serious loss was offset by subscriber gains — but not revenue — from adding 1M lower-priced Asia Pacific subs. Some 770,000 expensive subs were lost in Europe & West Asia. Standard monthly pricing is said to be about $7 in India, $3 in Turkey & $4.50 in Pakistan while it’s about $15 in France & Belgium & $20 in Switzerland.
Wall Street was less enthusiastic than the media. Benchmark Company analyst Matthew Harrigan, for instance, downgraded Netflix shares from “hold” to “sell,” noting, “Beyond the inflation challenged and more price sensitive consumer, the continued negative Netflix press glut, relating to member losses and even Prince Harry and Meghan (with their ultra-rich Netflix production deal), is a mild growth albatross.”