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Netflix co-CEO Reed Hastings believes linear TV could come to an end within the next decade.
"Streaming is working everywhere. Everyone is pouring in," Hastings said Tuesday on the media giant's second quarter earnings call. "It's definitely the end of linear TV over the next five, 10 years."
The prediction comes after producer of "Stranger Things" reported a loss of 970,000 subscribers during the second quarter, below the company's guidance of two million. In the first quarter, the streamer lost 200,000 subscribers — its first decline in over a decade.
"We're improving everything we do around marketing, improving the service, the merchandising, and all of that solely pays off," Hastings added. "But again, we're talking about losing one million instead of losing two million. So our excitement is tempered by the less bad results."
NETFLIX CEO SAYS ‘STRANGER THINGS’ COULD HAVE HAD A ‘COUPLE OF EXTRA EPISODES’ WITHOUT COVID FINANCIAL BURDEN
In its shareholder letter, Netflix said the company drew more TV viewing time than any other outlet during the 2021-2022 TV season, nearly matching the combined total of CBS and NBC, the two most watched broadcast networks. Netflix's share of total U.S. TV viewing reached an all-time high of 7.7% in June.
In the near-term, the company said it's focused on re-accelerating revenue and subscriber growth. Netlfix will roll out a cheaper, ad-supported subscription tier in partnership with Microsoft around the early part of 2023.
"Over time, our hope is to create a better-than-linear-TV advertisement model that’s more seamless and relevant for consumers, and more effective for our advertising partners," Neflix said. "While it will take some time to grow our member base for the ad tier and the associated ad revenues, over the long run, we think advertising can enable substantial incremental membership (through lower prices) and profit growth (through ad revenues)."
NETFLIX TURNS TO ‘STAR WARS’ FOR FRANCHISE INSPIRATION
In addition, the company has been testing a paid sharing feature in Chile, Costa Rica and Peru since March called "add an extra member."
It will also test an "add a home" option in Argentina, the Dominican Republic, Honduras, El Salvador and Guatemala starting in August, which will ask users to pay an extra monthly fee if they stream through a TV or TV-connected device located outside a primary household linked to their account for more than two weeks.