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Netflix to add mobile video games as subscriber growth slows

July 20

Netflix Inc mentioned it will make a deeper dive into video video games because the film and TV streaming service projected weak subscriber progress amid rising competitors and the lifting of pandemic restrictions that had saved folks at residence.

The corporate’s shares hovered about even at $531.10 in after-hours buying and selling on Tuesday.

Netflix is weathering a pointy slowdown in new clients after a increase in 2020 fueled by stay-at-home orders to curb the COVID-19 pandemic. In the US and Canada, Netflix reported shedding about 430,000 subscribers within the second quarter, solely its third quarterly decline in 10 years.

The streaming video pioneer mentioned it was within the early phases of increasing its online game choices, which might be obtainable to subscribers at no additional cost. The corporate will initially focus totally on cellular video games.

“We view gaming as one other new content material class for us, just like our enlargement into unique movies, animation and unscripted TV,” the corporate mentioned in its quarterly letter to shareholders.

The multi-year effort will begin “comparatively small” with video games tied to Netflix hits, Chief Working Officer and Chief Product Officer Greg Peters mentioned in a post-earnings video interview.

“We all know that followers of these tales need to go deeper. They need to have interaction additional,” Peters mentioned.

Netflix has dabbled in video video games with a number of titles linked to collection together with “Stranger Issues” and “The Darkish Crystal: Age of Resistance.”

Some analysts have mentioned the corporate that dominates streaming video wants to seek out new methods to jump-start subscriptions after years of speedy enlargement. In response to eMarketer, Netflix’s share of U.S. income from subscription streaming video will shrink to 30.8% by the top of 2021, from almost 50% in 2018.

“Netflix delivered one other underwhelming quarter as competitors within the streaming house heats up,” mentioned Investing.com senior analyst Jesse Cohen. “The absence of any new looming progress catalysts has been one of many essential causes for Netflix’s comparatively delicate efficiency this yr.”

Co-CEO Reed Hastings mentioned gaming and different ventures equivalent to podcasts and merchandise gross sales can be “supporting parts” to assist entice and retain clients to its core enterprise of streaming video.

The corporate projected it will add 3.5 million clients from July by way of September. Wall Avenue had anticipated a forecast of 5.5 million, based on analysts surveyed by Refinitiv.

For the just-ended quarter, Netflix added 1.54 million clients, beating analyst projections of 1.04 million. Complete subscribers numbered 209 million on the finish of June.

A yr in the past, Netflix picked up 10.1 million subscribers within the second quarter.

This yr, Netflix felt the influence of COVID-19 on TV manufacturing, which left the corporate with a small menu of latest titles. On the identical time, Walt Disney Co’s Disney+, AT&T Inc’s HBO Max and different companies attracted clients, and summer time blockbusters returned to film theaters.

The easing of pandemic security measures additionally lured folks out of their houses and away from their televisions.

Earnings for April by way of June got here in at $2.97 per share, under the common forecast of $3.16.

Netflix guarantees a heavier lineup within the second half of 2021, together with new seasons of “You,” “Cash Heist” and “The Witcher.”

If its subscriber forecast pans out, Netflix may have added greater than 54 million subscribers over the previous two years, a tempo in step with its annual additions earlier than the COVID-19 pandemic, the corporate mentioned.

It additionally famous that streaming tv nonetheless accounts for a small portion of total viewing time and that its service is much less mature exterior the US.

“It is nonetheless an infinite prize and we’re nonetheless in the most effective place to run after it,” Co-CEO Ted Sarandos mentioned. Reuters

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