Netflix subscriber numbers drop for second straight quarter

Netflix has reported losing subscribers for the second quarter in a row as the streaming giant battles fierce competition and viewer belt tightening, but the company has assured investors of better days ahead.

The loss of 970,000 paying customers in the most recent quarter was not as big as expected, and left Netflix with just shy of 221 million subscribers.

"Tough in some ways, losing a million and calling it success, but really we are set up very well for the next year," the company's co-chief and founder Reed Hastings said in an earnings presentation on Tuesday.

The company said in its earnings report that it had expected to gain a million paid subscribers in the current quarter. Netflix shares were up slightly in after-market trades — a sign that investors were remaining faithful.

Analysts noted that the results, even if not as poor as feared, were still troubling.

"Netflix's subscriber loss was expected but it remains a sore point for a company that is wholly dependent on subscription revenue from consumers," said analyst Ross Benes.

Benes added that "unless it finds more franchises that resonate widely, it will eventually struggle to stay ahead of competitors that are after its crown".

READ MORE: Netflix partners with Microsoft to offer cheaper subscription plan

New ideas

Netflix has been investing heavily in original content such as hit shows "Squid Game" and "Stranger Things" to fend off powerhouse competitors such as Disney, with its Marvel and Star Wars franchises.

Netflix executives have also made it clear the company will get tougher on sharing logins and passwords, which allow many to access the platform's content without paying.

Netflix said it is aiming to have an account-sharing payment system deployed broadly by next year.

Meanwhile, Netflix is working with Microsoft to launch a cheaper subscription plan that includes advertisements, which The New York Times has reported could launch by the end of this year.

Netflix opted to develop the lower-cost offering after a disappointing first quarter in which it lost subscribers for the first time in a decade — and after years of resistance against the very idea of running ads.

Microsoft will be responsible for designing and managing the platform for advertisers who want to serve ads to Netflix users.

"These earning results buy them time, and they need time to focus on stopping the bleeding," analyst Rob Enderle of Enderle Group told AFP news agency.

"Netflix is facing a significant amount of competition; to hold on as well as they have is an example of how resilient they are but they are not out of the woods."

READ MORE: Netflix looks to bring in low-cost service with ads, curb password-sharing