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What it means for you that Netflix lost a million more customers and is planning a less expensive version with adverts

Netflix said it will launch a less expensive, ad-supported version of its streaming service starting next year, which it believes will increase membership and profits, as Netflix lost nearly a million subscribers during the three months ending June 30, marking the largest-ever quarterly fall in subscribers.

The war in Ukraine, which led to a suspension of its services in Russia, was the key factor in the video streaming giant’s loss of about 2,00000 members during the January-March quarter.

Inflation that was on the rise, ferocious rivalry, and some Covid-related interruptions were also to blame. Additionally, Netflix lost 0.97 million subscribers in the June quarter, exceeding estimates that it could have lost up to 2 million customers.

While the firm significantly increased its user base in the Asia Pacific (APAC) in the June quarter, which led to a revenue rise of 23% over the prior year in the region, its average revenue per user in the region decreased as a result of pricing reductions in India.

What financial effects did India have on Netflix?

The Indian Express

In the APAC region, which includes India, Netflix reported membership growth; in the June quarter, the region attracted 1.1 million new members, up from a million during the same period the previous year.

While the APAC region had revenue growth of 23% over the previous year, Netflix’s average revenue per member (ARM) in the APAC region declined by about 2% as a result of price cuts announced in India the previous year.

In essence, Netflix acquired more members in the region, which means that more individuals in the region are now paying for Netflix compared to last year, which led to the 23% revenue rise in the APAC region.

Each consumer is paying a little less, though, as the average revenue per member has decreased by 2%, driven primarily by price reductions in India. The business reported that APAC ARM expanded by 4% on a constant currency basis, excluding India.

What is the situation with Netflix ads?


The business announced that it will provide a less expensive, ad-supported tier in the “early half of 2023.” It has previously declared cooperation with Microsoft to power and sell its advertisements. The business might gradually introduce its ad-supported version across all markets, beginning with those where “advertising spend is significant.”

Like most of our new efforts, we plan to launch it, gather feedback, and then immediately iterate to improve the product. As a result, our advertising business will probably look very different in a few years than it did on day one, Netflix wrote in a letter to shareholders.

“Over time, we intend to develop an alternative to linear TV advertising that is more frictionless, relevant, and productive for both our advertising partners and viewers.

Over the long run, we believe advertising can enable substantial incremental membership (via lower rates) and profit growth (through ad revenues),” the statement read.

“While it will take some time to develop our member base for the ad tier and the related ad income.

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Also Read: Netflix Loses Nearly 1 Million Subscribers in Q2 2022, says Strong Dollar Hit Revenue from Foreign Users


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