Netflix's Password Sharing Crackdown Backfires with Slow Subscriber Growth in Q2
Netflix's subscriber growth slowed in Q2, adding 4.82 million compared to 9.3 million previously. Crackdown on password sharing and sports events impacted. Ad-supported tier revenue doubled, offsetting slower growth. Stock up 35%.
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Netflix experienced a slowdown in subscriber growth during the second quarter, adding only 4.82 million subscribers compared to the previous quarter's 9.3 million. This decline was attributed to the company's crackdown on password sharing and viewers' focus shifting to major sporting events like the Euro soccer tournament. Despite this challenge, Netflix saw strong growth in its ad-supported tier, with ad revenue expected to double in the June quarter, contributing to a 16.4% increase in overall revenue. Popular shows like "Bridgerton" and "Baby Reindeer" remained top-viewed during this period. Investors are monitoring Netflix's expansion in the ad-supported segment and new growth initiatives. The company's decision to phase out its cheapest ad-free plan may impact subscriber growth, potentially driving more users towards the ad-supported tier. This strategic shift aims to boost ad revenue and offset the slower subscriber growth trend. Netflix's stock has shown strong performance, up nearly 35% for the year, surpassing the S&P 500 index.
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