Netflix (NFLX  ) shares were 7% higher following the company's Q2 earnings report which showed a miss on the top line and a beat on the bottom line. However, shares rallied as the company lost fewer subscribers than expected and is focusing on ways to monetize 'shared' accounts.

Of course, the larger backdrop for Netflix is that it's entering a new era of intense competition with streamers. No longer is it competing with studios or networks that weren't tech savvy and didn't have billions in the bank.

Instead, they are competing with deeper-pocketed companies like Disney (DIS  ), Amazon (AMZN  ), and Apple (AAPL  ). This means that the cost of content and war for creative talent will only intensify, while streamers' pricing power will be negatively affected. And, this tougher landscape is coming at the exact time that the market is now demanding that companies show profits rather than rewarding companies for growth.

Inside the Numbers

In Q2, Netflix reported $3.20 in EPS, beating expectations of $2.94 per share, according to Refinitiv. Revenue came in short at $8.0 billion, vs. $8.04 billion. Compared to last year's Q2, revenue was 8% higher and earnings were up 6%. Another headwind was also the strong dollar as Netflix gets an increasing share of revenues from foreign currencies.

Some reasons for shares being higher were the company losing fewer subscribers than expected and optimism over its lower-cost, ad-supported tier that it will unveil in early 2023.

Overall, the company has 220.7 million subscribers. It expects to add 1 million new subs in Q3, although this was less than analysts' expectations of 1.8 million new subscribers. The company is also exploring ways to reduce the number of accounts sharing passwords with family or friends outside of their homes.

Investors also seemed to like what they heard from Netflix's management as they are focused on re-igniting revenue growth. In their shareholder letter, they wrote "reaccelerating our revenue growth is a big challenge. But we've been through hard times before. We've built this company to be flexible and adaptable and this will be a great test for us and our high-performance culture. We're fortunate to be in a position of strength as the leader in streaming entertainment by all metrics (revenue, engagement, subscribers, profit, and free cash flow). We're confident and optimistic about the future."