Netflix subscriber growth slows as streaming giant flags move into games

Subscriber growth at streaming platform Netflix has slowed, with the company citing COVID-related production delays and a lighter first half slate for 2021 as reasons why subscriber growth in 2021 Q2 was just 1.54 million users.

In a subscriber and financial update, Netflix said that figure was ahead of its one million guidance forecast, however other reports suggest analysts had predicted growth of 1.75 million over the quarter.

For context, the company added 10.1 million subscribers in the second quarter of 2020.

Earnings per share were down for the June quarter. According to analysts surveyed by Refinitiv, earnings per share were forecast at $US3.16, but the company reported the actual figure at $US2.97.

Looking ahead to the next quarter, Netflix predicted it will add 3.5 million subscribers through to September, after Reuters reported Wall Street predicted 5.5 million.

The APAC region represented about two-thirds of Netflix’s global paid net additions in the quarter. In a letter to shareholders, the platform said it is “incredibly proud of our growing slates of local-language films and series in Asia Pacific”.

The APAC region has 27.88 million subscribers as of Q2 and brought in revenue of US$799 million in the quarter. This represents a 9% growth year-on-year for the quarter.

On its subscriber growth, Netflix said: “The slower member growth this year is due to COVID-pull forward from 2020, where we saw unprecedented growth due to lock-downs etc.

“COVID-related production delays in 2020 have led to a lighter first half of 2021 slate that will build through the course of the year. COVID and its variants make predicting the future hard, but with productions largely running smoothly so far, we’re optimistic about our strong slate in the second half of the year.”

Looking into the third quarter, Netflix forecast it will add 2.6 million customers to September, which came after Wall Street forecast an additional 5.5 million subscribers.

Netflix also confirmed plans to move into the gaming space, and the shareholder letter revealed that mobile games would be its initial focus, with current subscribers able to access games as part of their subscription.

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

“Games will be included in members’ Netflix subscription at no additional cost similar to films and series. Initially, we’ll be primarily focused on games for mobile devices.”


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