Wednesday July 21, 2021
User growth stagnates
Netflix wants to advertise for gamers in the future
In the Corona crisis, Netflix is flying its customers. But now the user growth is slowing down significantly. In view of the competition, the streaming market leader remains calm and is targeting new markets. For example for video games.
The streaming giant Netflix attracted fewer new users with its series and films in the second quarter than ever before in a quarter. In the three months to the end of June, the global number of subscribers only increased by 1.5 million to a total of 209 million, as the company announced on Tuesday after the US market closed. The forecast for the current quarter was also relatively meager with 3.5 million new customers.
The streaming market leader is under pressure in the face of increased competition and now wants to expand into new markets. Netflix boss Reed Hastings does not believe that people will lose interest in streaming after the pandemic. “The growth story remains intact, at least for the next few years,” he said in a video interview after the quarterly report was presented. Hatings is also not afraid of streaming competitors such as Hollywood giant Walt Disney and other financially strong rivals such as WarnerMedia with the popular pay channel HBO (“Game of Thrones”) or Amazon, who want to strengthen themselves through mergers and acquisitions. “We don’t see any major headwinds from new streaming competitors.”
Netflix was able to score points with some productions in the past quarter. For example, the second season of the French crook series “Lupine” was a hit that was accessed by 54 million user accounts in the first week alone. Such successes pale in comparison to the streaming boom that the Corona crisis triggered in 2020. In the same period last year, when many people were stuck at home due to a pandemic, there was a real rush on Netflix. In the first half of 2020, the company recorded rapid growth of over 25 million new users.
Blockbusters are missing due to the pandemic
The pandemic has led to an unusual distortion of the numbers, wrote Netflix in a letter to shareholders. In return, the quarter went far better financially than a year ago. Net income rose nearly 90 percent to $ 1.4 billion and revenues grew 19 percent to $ 7.3 billion. It was actually clear that this time the big blockbusters were not to be expected due to production problems caused by the pandemic. But when it comes to the outlook, analysts expected more. This caused the share to drop sharply in the aftermath of the trading day, but the price quickly recovered.
In addition to the main business with streaming, Netflix is increasingly setting the course to penetrate new markets. In June the television pioneer opened an online shop for fan articles. The offer is still manageable, but in the future Netflix could tap into a significant additional source of revenue through merchandising – following the example of its large rival Disney.
Following the signing of Facebook gaming expert Mike Verdu, plans for an attack in the video game business are also becoming more specific. “We are in the early stages,” said Netflix. The company confirmed a plan recently reported by financial service Bloomberg, according to which games will be made available on the Netflix streaming platform at no additional charge. The trend of running video games on servers in the network and letting users play them on all possible devices via streaming over the Internet is gaining momentum with offers from Microsoft, Google and Nvidia among others. Hastings has been emphasizing for years that Netflix not only competes with other streaming providers, but also with social media, YouTube and a number of other forms of digital entertainment.
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