(CNN) – Netflix reported on Tuesday that it lost 970,000 subscribers in the second quarter of 2022, a number well below its own forecast, which forecast the streaming giant would lose two million subscribers.
Investors were clearly pleased with the results. Netflix shares rose 8% Tuesday in after-hours trading.
Netflix said it will add 1 million more subscribers in the third quarter, numbers slightly below Wall Street expectations.
So, with Wall Street, Hollywood, and the media world all focused on Netflix’s subscription numbers, the company paused the bleeding during a terrifying year.
Bad year of Netflix
In April, the company reported that it lost subscribers in the first quarter of 2022, the first time this has happened in any quarter in more than a decade.
The number of subscribers it lost at that time reached 200,000, which seems tiny compared to the 221 million global subscribers. However, the loss of that number of users was so significant that the company had previously predicted that it would add 2.5 million new subscribers for the quarter, which was very different.
Then, Netflix stock burned (it’s currently down nearly 70% to date), wiping billions of dollars off its market value, and laying off hundreds of employees.
Netflix is pinning its hopes on a potential savior: advertising.
The company announced Wednesday that it will partner with Microsoft on a new, cheaper, ad-supported subscription plan. Despite the fact that Reed Hastings, CEO of Netflix, has been against the idea for years, the announcement is now an important part of Netflix’s plans to increase revenue in the future. The new plan is said to come before the end of 2022, but Netflix admits that its nascent advertising business is in its “early days”.
The company will also focus on clamping down on password sharing and creating engaging content to help turn the tide.