On Tuesday, Netflix shared its second-quarter earnings report and even though the world’s largest streamer shed 970k subscribers during the three-month period, that total is less than half of the 2 million that it had projected in April. The service trumpeted this semi-reversal of fortune as a positive amidst an ongoing narrative of trouble for the streamer. Netflix is now projecting an increase of 1 million subscribers during Q3, which — if that comes to pass — would erase the losses from both Q1 and Q2 2022.

In a letter to shareholders, Netflix went into detail about many of its plans to not only increase its subscriber numbers, but also its overall revenue. Front and center in that discussion was the previously announced launch of an ad-supported tier, and it appears that despite obvious forward progress, the roll-out will be coming slightly later than initially anticipated.

Originally revealed following the company's Q1 earnings report, word began circulating shortly thereafter that Netflix was targeting a launch sometime before the end of 2022.

The streamer announced a significant step in that direction last week as it unveiled a partnership with Microsoft to help facilitate the ad sales and infrastructure portion of the new undertaking. However, in the letter, Netflix told shareholders that the lower-priced subscription option would not be coming until next year.

“We recently announced Microsoft as our technology and sales partner and we’re targeting to launch this
tier around the early part of 2023,” Netflix said. “They are investing heavily to expand their multi-billion advertising business into premium television video, and we are thrilled to be working with such a strong global partner. We’re excited by the opportunity given the combination of our very engaged audience and high quality content, which we think will attract premium CPMs from brand advertisers.”

Despite the delay, analysts are projecting that the addition of an ad-supported tier will increase revenue by over $1 billion through increased subscriber totals and advertising income. So, while it might take a few extra months to bring to market, the investment in time and resources seems like it will ultimately be worth it for Netflix.

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Netflix

Netflix is a leading subscription-based video streaming service that offers on-demand access to an extensive library of over 3,000 movies, 2,000+ TV shows, and a growing collection of acclaimed Netflix originals. Renowned for producing groundbreaking content, Netflix has become a cultural powerhouse with hit originals like “Stranger Things,” “Wednesday,” “Squid Game,” “The Crown,” “Tiger King,” “Bridgerton,” “The Witcher,” and “Black Mirror.”

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The platform constantly updates its catalog, introducing fresh content alongside timeless classics and international hits. Netflix’s commitment to storytelling has also earned critical acclaim, with award-winning exclusives such as “Roma,” “Marriage Story,” “The Power of the Dog,” “Mank,” and “Ma Rainey’s Black Bottom.” In 2023, their animated film “Guillermo del Toro’s Pinocchio” won an Academy Award for Best Animated Feature, further solidifying Netflix’s reputation for high-quality content.

Recently, Netflix has expanded beyond standard movies and TV titles with the addition of video podcasts, and is also exploring a digital store that would offer third-party streamers within the app.

Netflix offers three plans – stream on 2 devices in HD with the “Standard with Ads” ($8.99) plan, on 2 devices in HD with the “Standard” ($19.99) plan, and 4 devices in up to 4K on the “Premium” ($26.99) plan.

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