Netflix confirms it is adding video games as subscriber growth slumps

Netflix has confirmed that it is adding video games to its library, amid declining subscriber growth.

The company said it will add the game at no additional cost to those with existing subscription plans. But it didn’t say when they would arrive, or what kind of games it would offer.

The announcement comes as part of its latest results that showed its rapid customer growth is slowing down.

The company attributed the issue to people leaving the house as the coronavirus lockdown lifts, as well as the fact that problems making films and TV shows under the pandemic meant it had less engaging content than usual.

The results showed that the video service added 1.5 million subscribers during the April-June period. This is slightly better than the modest growth that management forecast after a sluggish start to service during the winter months, but well below its growth rate in recent years.

Netflix’s net profit of 5.5 million subscribers during the first six months of this year represents its weakest performance since 2013 – a time when the company was still introducing more original programming as it expanded existing TV series and movies. License was out.

Now Netflix is ​​taking another leap forward by offering video games that it intends to build as part of what it describes as a multi-year expansion. The Los Gatos, Calif., company telegraphed the move last week when it revealed the hiring of a veteran video game executive, Mike Verdu, to explore potential opportunities in another area of ​​entertainment.

“We’re doing them to help the subscription service grow and become more important in people’s lives,” Netflix co-chief executive Reed Hastings told investors during Tuesday’s discussion.

Netflix Chief Product Officer Greg Peters said the company will initially focus on mobile games and eventually expand to consoles and TV sets as well. Games will initially be tied to Netflix’s most popular programming, Peters said, but standalone titles could be added to the mix as well. He also speculated that Netflix might eventually make a TV series or movie inspired by one of its video games.

“There’s a big, big prize here, and our job is to be really focused,” Peters said.

Despite this year’s growth slowdown, Netflix remains the world’s largest streaming service in an increasingly competitive field that includes The Walt Disney Company, HBO, Amazon and Apple. Netflix ended June with 209 million subscribers worldwide.

Netflix’s piracy has also made steady profits. The company earned $1.35 billion, or $2.97 per share, which is almost double from the same period last year. Revenue increased 19% from last year to $7.3 billion.

But the lack of the first half marks a dramatic reversal from last year, when government-imposed lockdowns across the world drove people into a binge frenzy while corralled at home. Already the world’s largest video streaming service, Netflix scored 26 million subscribers during the first half of last year when the pandemic began in March 2020. .

While no one expected Netflix to maintain that breakneck pace, the decline in subscriber growth this year has been more severe than anticipated. Shares of Netflix have fallen nearly 10% from their peak of $593.29 six months ago. Shares rose slightly in extended trading after Tuesday’s news emerged.

Netflix management has blamed pandemic-induced production delays for this year’s slowdown, which left its video service with a less proven hit. Los Gatos, Calif., is hoping to tackle new-season releases of popular series like “Sex Education” and “The Witcher,” as well as movies starring big-name stars, during the second half of this year Will go away Leonardo DiCaprio and Meryl Streep.

Still, Netflix disappointed investors with forecasts for only an additional 3.5 million subscribers during the July-September period. That was well below analyst estimates for third-quarter profit of 5.6 million customers, according to FactSet Research. CFRA analyst Tuna Amobi said the “pretty overwhelming” guidance raised further concerns about the fallout of the pandemic lockdown, along with intensifying competition in video streaming.

The conservative view suggests that Netflix isn’t expecting an immediate boost from its entry into the highly competitive video game arena already contested by far more seasoned companies like Epic Games, Microsoft and Electronic Arts.

But if the move into video gaming pays off, Netflix may eventually have more leverage to boost its prices. The company has been gradually increasing subscription costs in recent years, helping to increase its average monthly revenue per subscriber to $14.54 in its largest markets, the US and Canada. That’s a 16% increase from $12.52 a month two years ago.

Additional reporting by The Associated Press

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