Music business

Netflix lost 970,000 subscribers in the second quarter. How will Spotify fare?

The successful release of the fourth season of stranger things couldn’t prevent Netflix from losing subscribers in Q2 2022 – but the video giant’s net loss of paying members wasn’t as bad as expected.

According to his Q2 2022 resultsreleased yesterday (July 19), Netflix lost nearly a million subscribers in three months from April to June.

This represented the largest quarter-over-quarter decline in paid users in Netflix history. Still, that was well below the company’s second-quarter net loss of 2 million subscribers — forecasts it issued when it announced dismal first-quarter results earlier this year.

At the end of the second quarter, Netflix had 220.67 million paid subscriptions worldwide (see below), down 970,000 quarter over quarter. (For context: Spotify had 182 million subscribers worldwide at the end of the first quarter.)

Additionally, Netflix now forecasts a net subscriber Gain 1.0 million in Q3.

There were also positives for Netflix in the second quarter: the company’s revenue during the quarter increased 8.6% YoY, or 13% at constant currency.

And ‘ARM’ (Average Revenue Per Membership), the ARPU equivalent of NFLX, has increased seven% at constant exchange rate YoY – sign that price increases adopted earlier in 2022 probably take effect.

(ARM is defined by Netflix defined as “streaming revenue divided by average number of paid streaming subscriptions divided by number of months in period”.)

In April, Netflix’s disappointing first-quarter results (which showed a net loss of 200,000 Q1 subscribers quarter-on-quarter) raised concerns of a similar fate for Spotify.

However, Spotify managed to swim against the tide: it added 2 million listeners on a quarterly basis in the first three months of 2022, ending the period with 182 million users worldwide.

Spotify attributed its strong performance at the time to an increase in new subscribers in Latin America and Europe, which offset a drop in its user numbers in Russia when the company decided to cut billing on the market amid tensions in Ukraine.

“There’s no risk that Spotify will lose its leadership position any time soon – but the erosion of its share is steady and persistent.”

Midia Research report covering Q2 2021

Although Spotify has started to lose some of its market share to smaller players in recent years, the platform continues to dominate the global subscription market.

It controlled 31% of the global music streaming market in the second quarter of last year, up from 33% a year earlier, but more than double that of closest rival Apple Music, which held 15% of the market.

This is according to the UK-based research company Search MIDiA. MiDiA said in its report covering these numbers: “There is no risk that Spotify will lose its leadership position anytime soon – but the erosion of its share is steady and persistent.”

However, MiDiA also noted in January (this year) that Spotify could lose market share to alternatives like YouTube Music, which resonates among Gen Z and millennials. Other smaller rivals include Amazon Music, Tencent Music in China and NetEase Cloud Music – although they are only available in China – as well as Deezer and Yandex.

To cement its position in the industry and increase its revenue stream, Spotify has continued to diversify its business lately by branching out into video podcasts and making acquisitions of other platforms that offer services beyond streaming. musical.

The company recently extended its publication of video podcasts to creators in six additional countries, including Germany, France, Italy, Spain, Brazil and Mexico.

Spotify also recently acquired Heardle, a musical trivia game inspired by the Wordle word game, which The New York Times bought in January. Heardle allows players to guess a song based on its opening notes.

Additionally, Spotify completed its purchase of digital audiobook distribution company Findaway last month for an undisclosed amount, allowing the company to compete in the audiobook market with Amazon’s Audible.

Spotify is expected to release its second quarter results next Wednesday (July 27).

Shares of SPOT closed up 5% on the NYSE on Tuesday (July 19) but down 55% year-to-date, which some financial watchers attributed to slow growth in its new users and premium subscribers. But with Spotify’s dominance in the market, some still remain bullish on the potential of the company.

The company said in April that it expects a another 6 million net new subscribers in the second quarter, excluding the anticipated loss of 600,000 Russian subscribers.

Spotify also reported an increase of around 14 million net new MAUs in the second quarter, not including the potential loss from closing its operations in Russia.The music industry around the world