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Netflix adding video games to jack up growth

San Francisco—Global streaming giant Netflix on Tuesday said it added more subscribers than expected in the recently ended quarter and will add video games to its entertainment mix to fuel growth.

The company ended the second quarter with 209 million paid subscribers and revenue of $7.3 billion, some 19 percent higher than the same period a year earlier, according to an earnings release.

Profit was reported at $1.35 billion as compared to $1.7 billion in the preceding quarter. The net income figure missed market expectations.

The streaming leader said the pandemic had “created unusual choppiness” in its results after strong growth last year during the pandemic, which has now subsided.

Netflix said it is continuing to invest in content as production recovers from pandemic-caused delays, and that it is “in the early stages of expanding into games.”

“We view gaming as another new content category for us, similar to our expansion into original films, animation and unscripted TV,” the streamer said.

“Games will be included in members’ Netflix subscription at no additional cost similar to films and series.”

Netflix shares were up slightly in after-market trades following the release of the earnings figures.

Netflix seems to have reached a saturation point in the United States in terms of reaching households, but has been nevertheless able to raise prices and increase revenue in the US market, according to eMarketer senior analyst Eric Haggstrom.

“Expansions into video games, audio and merchandise may drive some incremental growth, but ultimately growth in subscribers and revenue should be much lower than in the past,” Haggstrom said.

And he noted that Netflix had lost a bit of market share to relative streaming upstart Disney+, which is only in its second year.

Netflix recently recruited a video game veteran from Facebook to lead its gaming team. 

Mike Verdu was hired to take charge of video game development at the Silicon Valley company, which has openly said hit games such as Fortnite are its competition for people’s online entertainment time.

Netflix has dabbled with games before, releasing an interactive “Bandersnatch” episode of original series “Black Mirror” and also a free mobile game spinning off its hit show “Stranger Things.”

The company has slowly added video game talent, but Verdu is a high-profile recruit that could signal ramped up plans.

With the global gaming market now exceeding $300 billion, according to an April study by consulting firm Accenture, Netflix’s move would open a new and highly lucrative stream of revenue for the tech giant. 

Topics: Netflix , Eric Haggstrom , net income , revenue , “Bandersnatch”
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