Netflix details video game surge as it predicts weak growth
July 20 (Reuters) – Netflix Inc (NFLX.O) has said it will dive deeper into video games as the movie and TV streaming service forecasts weak subscriber growth amid competition growing and lifting of the pandemic restrictions that had kept people at home.
The company’s shares were at around $ 531.10 after-hours Tuesday.
According to analysts polled by Refinitiv, profits from April to June were $ 2.97 per share, below the average forecast of $ 3.16.
Netflix is experiencing a sharp slowdown in new customer numbers after a boom in 2020 fueled by stay-at-home orders to curb the COVID-19 pandemic.
The company said it was in the early stages of expanding its video game offering, which would be available to subscribers at no additional cost. It will initially focus mainly on mobile games.
“We see games as another new category of content for us, similar to our expansion into original films, animation and unscripted television,” the company said in its quarterly letter to shareholders.
Some analysts have said Netflix needs to find new ways to kick start subscriptions after years of rapid expansion.
“Netflix delivered another disappointing quarter as competition in the streaming space intensifies,” said Jesse Cohen, senior analyst at Investing.com. “The lack of any new impending growth catalyst has been a major reason for Netflix’s relatively subdued performance this year.”
The company predicted it would add 3.5 million customers from July through September. Wall Street was counting on a forecast of 5.5 million.
For the quarter just ended, Netflix added 1.54 million customers, reaching 209 million in total. Wall Street expected 1.039 million new listings.
A year ago, Netflix added 10.1 million subscribers in the second quarter.
This year, Netflix felt the impact of COVID-19 on TV production, which left the company with a small menu of new titles. At the same time, Disney + from Walt Disney Co (DIS.N), HBO Max from AT&T Inc (TN) and other services have attracted customers, and summer blockbusters have returned to theaters. Read more
Netflix promises more dense programming in the second half of 2021, including new seasons of “You”, “Money Heist” and “The Witcher”.
Reporting by Eva Mathews and Akanksha Rana in Bengaluru and Lisa Richwine in Los Angeles; Editing by Shounak Dasgupta and Lisa Shumaker
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