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Reed Hastings Takes Cautious Victory Lap; Pending Ad-Supported Plan Won’t Have Access to All Content

After Netflix disclosed it lost less than 1 million subscribers in the second quarter, co-founder/co-CEO Reed Hastings appeared relieved while circumspect on the fact the streamer still lost subs — just not the 2 million net global subscribers it had forecast to shed.

“We’re talking about losing 1 million instead of 2 million,” Hastings said on the July 19 webcast. “Our excitement is tempered by less bad results.”

One quarter removed from criticizing his company’s content offerings in part for the streamer’s 200,000 net subscriber loss, Hastings reversed course 90 days later, contending programming such as the recent release of the fourth season of “Stranger Things” helped retain subscribers.

“We’re executing really well on the content side,” he said.

Indeed, with much of Hollywood eyeing the streaming pioneer/behemoth’s subscriber second-quarter (ended June 30) numbers with rapt attention, many observers saw the fortunes of studio rivals HBO Max, Paramount+, Disney+, Hulu and even Amazon Prime Video hanging in the balance.

Netflix re-elevated its dominating global subscriber count past 220 million, while executives disclosed the service plans to launch its less-expensive ad-supported subscription plan in early 2023. Hastings also proclaimed that linear TV would be gone in five-to-10 years.

“Looking forward, streaming is working everywhere,” he said. “Everyone is pouring in … definitely the end of linear TV over the next five, 10 years. So, we’re very bullish on streaming.”

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The market responded approvingly, sending Netflix shares up more than 7% in after-market trading. Shares are up almost 4% July 20 in heavy trading.

When asked if the ad-supported subscription would include access to all programming, co-CEO and chief content officer Ted Sarandos said the undisclosed priced tier would include most content.

“The vast majority of what people watch on Netflix, we can include in the ad-supported tier,” Sarandos said. “So, there are some things that don’t that we’re in conversation with the studios on. But if we launch[ed] the product today, the members in the [ad-supported plan], would have a great experience. And we will clear some additional content, but certainly not all of it.”

Greg Peters

Separately, Greg Peters, chief operating officer/chief product officer reiterated that Netflix’s recently disclosed deal with Microsoft for the service’s pending ad-supported streaming plan, and move to charge subscribers in select South American countries an additional fee for sharing their passwords, was well-thought-out strategy.

“We’re looking at this as an extension of two things we think we have historically done, which is one, be very consumer-centric and think about the consumer experience,” Peters said. “We think we have a real opportunity here.”

He said the March rollout of the $2.99 monthly password surcharge in Chile, Costa Rica and Peru, and subsequent bow in August to subscribers in Argentina, Honduras, the Dominican Republic, El Salvador and Guatemala who share their accounts with non-subs, have been well thought out.

“We’re not asking customers to not share, but to pay a little more to add a member or additional home,” Peters said. “We’ve been working behind the scenes on this for almost two years. And now this is where the rubber hits the road.”

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