Netflix Report Earnings: Will Tomorrow’s Results Make or Break the Streaming Giant?

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Netflix has been having a rough year thus far. After reporting a loss of 200,000 subscribers in the first quarter of 2022, the streaming giant is anticipating an even bigger loss—an estimated 2 million subscribers—for the second quarter. To make matters worse, the company’s stock plummeted by 70% year-to-date. Investors are now eagerly awaiting the Netflix report earnings as the company releases its second-quarter results tomorrow. The report and its fallout could shape the future of not just Netflix, but the entire streaming industry.

Despite its woes, Netflix is still the global streaming leader in the first quarter of 2022 with 221.64 million subscribers, followed closely by Amazon Prime (200 million subscribers). However, if the latter continues its astonishing growth and the former performs below expectations, Amazon Prime could overtake Netflix in the second quarter or within the year. This could very well change the face of streaming content prioritization.

While Netflix is the leader when it comes to shows, Amazon has the biggest movie library among all streaming service providers. It also typically streams more recent movies than Netflix. With this, the Amazon library, as of July 10, 2022, contains 10,002 titles compared to Netflix’s 5,814. Should Netflix perform poorly based on the Q2 report, streaming services could invest more in distributing and producing more movies as opposed to shows.

In addition, Netflix’s subscriber loss turned into gains for its competitors. Besides Amazon Prime, streaming services such as HBO Max, Disney+, Paramount+, and Peacock have all increased subscribers.

Another concern cited by Netflix is password sharing. Recent streaming statistics show that over 100 million households worldwide access Netflix through someone else’s password, with over 30 million coming from North America. And the global inflation crisis is making matters worse for Netflix and its potential clientele.

However, not everything is looking sour on Netflix’s end.

Opportunities to Recover

As industry experts expect not-so-encouraging outcomes from the upcoming Netflix report earnings, the streaming giant could pull a rabbit out of its hat and actually show signs of recovery from its dismal Q1 performance. After all, it still holds the ticket to some of the most well-received original programs on any streaming platform. “Squid Game” is the most streamed program of all time and shows like “Stranger Things” and “Bridgerton” are not far behind.

The fourth season of “Stranger Things” made waves upon its release in late May, amassing an astounding 7.2 billion minutes of viewership as it easily outclassed any show released by other platforms. It was so buzzworthy that it made some of the decades-old songs featured on its soundtrack scale music charts worldwide. Meanwhile, its biggest property, ” Squid Game,” is expected to make a return next year. It could also come up with more notable programs within the year that can bring back viewers or attract new ones.

The other ace up Netflix’s sleeve is its upcoming ad-supported subscription plan. Developed in cooperation with Microsoft, the plan will be cheaper than the company’s current basic package, allowing it to compete with smaller players. Reminiscent of YouTube, it will routinely display ads after set periods, which Netflix expects to boost revenues and accessibility. The ad-supported plan is expected to be rolled out in the last quarter of 2022.

Furthermore, Netflix plans to clamp down on password sharing by testing two new features that enable subscribers to share their accounts for an extra charge, namely Add an Extra Member and Transfer Profile to a New Account. Both functionalities will likely be officially released soon.

Only time will tell if Netflix can recover from the ills of market saturation and the ever-changing demands of the streaming audience. That time begins tomorrow when the company releases its second-quarter results.