So Netflix numbers came out this afternoon and I've been refreshing my brokerage app like an idiot even though I own approximately four shares of the company (bought on a whim in 2019, don't ask). Q2 subscriber losses came in at 970,000, which sounds bad until you remember they'd told everyone back in April to brace for 2 million lost. So the stock's up after hours, everyone's relieved, and the headline write-ups are all doing the "not as bad as feared" thing.
Fine. But here's what I actually want to talk about, because the earnings call itself is duller than a Tuesday: the subscriber number held up mostly because of Stranger Things. Volume 2 dropped July 1st, and Netflix straight up credited it in their own shareholder letter for keeping people from canceling. Which, sure, I believe it. My wife and I burned through both volumes over about five nights, staying up way too late watching Vecna do his thing, and I noticed our group chat with her college friends was suddenly active again after like eight months of silence. One good season of television is apparently enough to buy a company several quarters of goodwill. Wild business to be in.
What's actually eating at me is the other stuff buried in the same announcement. Netflix confirmed they're still building out that ad-supported tier (they already brought Microsoft on as the ad-tech partner a week or so back), and they keep dropping hints about "paid sharing," which is corporate-speak for cracking down on password sharing between households. I have opinions about this and none of them are charitable.
Here's my situation: my brother-in-law has been on my Netflix account for something like three years. He lives two states away. Under whatever geofencing or verification system they eventually roll out, that's exactly the kind of account they're trying to kill. And I get it, from a pure revenue math perspective — Netflix has said something like 100 million households are watching on borrowed logins worldwide, and even converting a fraction of those into paying accounts is real money. I'm not naive about why they're doing it.
But as a customer it just feels bad? Like, the whole pitch of streaming versus cable was supposed to be "pay one reasonable price, stop dealing with cable company nonsense." Now we're inching toward extra device fees and ad tiers and account verification texts, which is starting to rhyme with the exact thing everyone was trying to escape in like 2013. I don't think Netflix is evil for doing this. I think it's just kind of a letdown, the way watching a band you loved in college start doing corporate sponsorship deals is a letdown. Not a betrayal, just a small deflation.
Anyway — the ad tier is apparently coming sometime in the next few months, and from what's been said publicly it's going to be a genuinely separate cheaper plan, not ads bolted onto what people already pay for. I'll probably try it out of curiosity even though I mute every ad on YouTube within four seconds like a reflex. My guess is the content library on the ad tier ends up more limited at launch, licensing being what it is, and everyone will complain about that specifically in about six months.
One other small thing from the call I keep chewing on: their international numbers were basically flat while the ad and password stuff got most of the airtime, which tells you where the actual growth story is these days. It's not "more people sign up," it's "squeeze more revenue per existing household." That's a maturing-industry move, not a growth-industry move, and I think that's the real headline under the relieved stock price today. Companies don't start optimizing monetization this hard when they think there's a wall of new subscribers still coming.
I don't have a tidy verdict on any of this. I'm going to keep paying for my plan, my brother-in-law is going to keep mooching off it until they make me stop, and I'm going to keep half-watching prestige TV at 11pm on a Tuesday like everybody else. Just don't expect me to pretend the ad tier is some kind of gift to consumers when it comes.