It shouldn't be a big surprise that Netflix (NFLX 3.11%) lost subscribers in its mature U.S. and Canada (UCAN) region during the second quarter. But the size of the loss -- a 430,000 drop in active subscribers -- still jumped off the page when Netflix released its earnings results.

While the UCAN region has shown signs of saturation for several years now, there's no reason for investors to think last quarter's results are an indication of what's ahead for the video-streaming leader. Here are three reasons why the subscriber loss doesn't worry me.

Four people in a living room watching TV.

Image source: Netflix.

1. Improving subscriber engagement and retention

Netflix's subscriber losses didn't come from a spike in cancellations as businesses reopened and the weather warmed up in the U.S. and Canada. In fact, management noted subscriber engagement and retention improved in the second quarter compared to the same period two years ago. The average Netflix subscriber around the world spent 17% more time streaming in this latest period than in the second quarter of 2019.

That statistic is particularly impressive in light of two factors investors would expect to result in an increase in churn and a decrease in engagement. First, Netflix raised its prices yet again in the U.S. and Canada (and other markets) in late 2020 and early 2021. Management previously noted some sensitivity to its last price increase in 2019, which showed up in its second-quarter results that year.

The second factor is the relatively light content slate of early 2021. COVID-19-related production delays forced much of Netflix's original content lineup to the second half of the year, more so than previous years. Management pointed out that content amortization over the first six months of the year increased just 9% year over year versus 17% in 2020 and 22% in 2019. Nonetheless, it seems Netflix's content spending is becoming more efficient as it scales.

Considering churn is one of the most important factors for the video-streaming industry, seeing Netflix continue to add total paid subscribers in this environment is a great sign for long-term growth.

2. Limited impact from competition

Netflix has a lot more competition than it did just a couple years ago. Walt Disney's Disney+ and AT&T's HBO Max have attracted a lot of attention, and other media companies have launched or expanded their streaming businesses.

But management says their entries into the market haven't had a big impact on Netflix's business. "Does HBO or Disney or other entries have a differential impact compared to the past?" co-CEO Reed Hastings asked rhetorically during Netflix's second-quarter earnings call. "[W]e're not seeing that in the detail that we have per country," he said before adding, "We're not seeing it in the total viewing."

In other words, when you look at Netflix's results in countries where the competitors are and where they aren't, management doesn't see a significant impact from the competition on its respective growth trajectories.

3. A strong outlook for the future

Netflix's third-quarter outlook calls for 3.5 million global net additions. That's still a relatively low number of net additions for Netflix, but looking past the third quarter, there are a couple reasons to be optimistic.

First of all, management expects net additions to normalize in the fourth quarter as the content slate catches back up, and it moves into a seasonally strong period. Netflix managed a strong fourth quarter in 2020 that was practically normal compared to 2019 and 2018. That didn't prevent the COVID-19 hangover from showing up in the first half of 2020, though. Nonetheless, a more normal fourth quarter is a sign that content is the key to driving subscriber growth and should provide confidence for 2022 and beyond.

Second, the secular growth of streaming is still in its early stages. Management pointed to Nielsen data that showed streaming accounted for just 26% of screen time in the U.S., and the vast majority of time spent watching television still goes to linear networks. Nielsen expects streaming to increase its share of screen time to 33% by the end of the year and to keep growing in 2022 and beyond. Netflix should be a beneficiary of this secular trend as more people cut the cord and shift to streaming as their primary source of video entertainment.