Netflix's Q2 Subscriber Growth 'Slows'... Will There Be a Turnaround in the Second Half?

Netflix Adds 1.54 Million Subscribers in Q2
Paid Subscriptions Reach 209 Million, Up 8.4% Year-on-Year

[Asia Economy Reporter Eunmo Koo] Netflix continued its growth trend in new subscribers and earnings in the second quarter. However, as the effects of COVID-19 diminished, the number of new subscribers dropped to a record low, showing a sluggish performance.

On the 20th (local time), Netflix announced that its paid subscribers increased by 1.54 million in the second quarter of this year, bringing the total number of paid subscription accounts to 209 million, an 8.4% increase compared to the same period last year. This figure exceeded the market expectation of a net increase of 1 million.

Although the subscriber growth trend continued, the quarterly subscriber count remained at a record low. The net increase of 1.54 million paid subscribers is significantly lower compared to 15.8 million recorded in the first quarter of last year and 3.9 million in the previous quarter. Netflix explained in its shareholder letter, "Last year, we achieved high growth due to COVID-19, but this year, entering a low-growth phase, the volatility in new subscriber numbers has increased."

Netflix Quarterly Subscriber Growth Trend (Source: CNBC)

Despite the slowdown in subscriber growth, overall business performance continued to rise. Netflix's operating profit for the second quarter was $1.848 billion, a 36% increase from $1.358 billion in the same period last year. Revenue for the same period grew 19% to $7.342 billion. Net income was $1.353 billion, and earnings per share (EPS) were $2.97.

With the recent subscriber growth trend continuing, if the number of paid subscribers in the third quarter exceeds the expected increase of 3.5 million, Netflix's net increase in paid subscription accounts over the past 24 months could reach 54 million, or 27 million annually. This indicates a recovery to levels similar to Netflix's annual net increase before the COVID-19 pandemic.

In this earnings announcement, Netflix emphasized that future growth potential remains open. According to a report by market research firm Nielsen, streaming accounts for only 27% of the total TV viewing time by U.S. viewers, with Netflix holding about 7% of that share. This means that even in the U.S., where streaming services are considered most mature, there is still ample room for more consumers to choose Netflix.

The content lineup scheduled for the second half of the year is also expected to positively impact Netflix's growth. Netflix plans to release follow-up seasons of globally beloved series such as "The Secret Counseling of Otis," "The Witcher," and "Money Heist," as well as new Netflix films including sequels to "The Kissing Booth," and releases like "Red Notice" and "Don't Look Up." Domestic productions set for release in the second half include "Kingdom: Ashin of the North" starring Jun Ji-hyun, "The Silent Sea" starring Gong Yoo and Bae Doona, "Squid Game" starring Lee Jung-jae, "Hellbound" starring Yoo Ah-in, Park Jung-min, and Kim Hyun-joo, and "Baek Spirit" featuring Baek Jong-won.

This content was produced with the assistance of AI translation services.