In Netflix’s Q2 report, the company reported revenue growth of 19%, above estimates, and new paid subscribers also surpassed Wall Street estimates. Netflix said it will add video games to its streaming service.
In its report on Tuesday, Netflix (NFLX) gave mixed signals to investors as the company continues to face contrasting performance comparisons from last year.
Netflix’s profit for the second quarter ended June 2021 rose 87% to $ 2.97 per share (up from last year’s value), but fell below the analyst average of $ 3.16.
Revenues rose 19% to $ 7.34 billion, slightly beating analysts’ forecasts of $ 7.32. Netflix’s quarterly earnings and earnings statistics for the last 2 years are available here.
The streaming company added 1.54 million new paid subscribers worldwide, better than market analysts’ expectations of $ 1.19 million. However, these numbers show a sharp contrast to last year’s demand boom amid the coronavirus pandemic. In the first half of 2020, Netflix attracted nearly 26 million new customers.
Nearly all of Netflix’s growth in new paid subscribers in the second quarter came from two regions – Latin America and Asia Pacific, the company’s two smallest regions. At the same time, the streaming service lost 430,000 customers in its largest regions of the United States and Canada for the first time in two years.
Investors have seen this decline in the company’s last report.
Netflix shares are down 3.4% in the last quarter and are down 1.8% since early 2021.
Analysts point out that the company needs new growth incentives to convince existing and future shareholders of its potential and ability to withstand increasing competition. The addition of video games to the platform could be such a new impetus, as reported by Netflix on Tuesday.
Video games give Netflix new benefits
Netflix executives have announced that they will release video games on the mobile version of their platform. Netflix will both develop games internally and license games from third-party studios, as it does for movies and shows.
That said, Netflix Chief Product Officer Greg Peters said, “We think of this (video games) as a key part of our subscription offering.”
As such, the company is looking at video games as a way to get more people to join its core service. It will also help Netflix better compete with growing streaming services such as Disney + (DIS), Amazon Prime Video (AMZN), Apple TV (AAPL), and more.
However, launching video games on the mobile version of its Netflix app could face confrontation from Apple, which may announce new terms for streaming Netflix games on its mobile app on iPhone and iPad.
Netflix expects to add 3.5 million new paid subscribers in the third quarter, while analysts predicted 5.46 million.
The company’s third-quarter earnings per share forecast is $ 2.55, ahead of forecasts, and revenue is in line with Wall Street’s forecasts of $ 7.48 billion. The company initiated a share buyback program last quarter and said it would continue to buy back shares in the future.