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Netflix Adds 1.5 Million Subscribers, Expands into Gaming

Netflix releases earnings say it added 1.54 million new paying customers in Q2. The company announced it will create a gaming content category with a focus on mobile.

SageFX - Jul, 21, 21

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Principal Points

  • Netflix releases earnings say it added 1.54 million new paying customers in Q2
  • The company announced it will create a gaming content category with a focus on mobile

Netflix, the streaming giant valued at about $235bn, released its earnings report for the second quarter of 2021. The financial results, announced after the bell on Tuesday, delivered higher-than-expected revenue and paid net additions, but lagged on several key measures.

Earnings per share for the company arrived lower than the consensus at $2.97 a share, vs $3.16 a share expected. Profit increased to $1.35bn. Revenue increased 19% to $7.34bn, topping analyst expectations of $7.32bn. And global paying subscriber base grew by 1.54 million to a total of 209.2 million paid memberships. The growth rate beat the consensus of 1.19 million.

The relatively low subscriber growth expectations were related to the fact that analysts did not project a blockbuster quarter for the streaming giant now that the economic reopening is gathering pace. In contrast, for the same quarter a year ago when the world was largely under lockdowns, Netflix added 10 million paying customers.

“We are mostly competing with ourselves to improve our service as fast as we can. If we do that, we’re confident we can maintain our strong position and continue to grow nicely as we have been for the past two-plus decades,” Netflix said in its second-quarter letter to shareholders.

Netflix Explores the Gaming Sector

In signs of expanding its presence across a broader area of services, Netflix announced it is looking into the gaming business. The California-based entertainment company said it will add a gaming category to its list of services and it would come at no additional cost for subscribers. In the early steps, the focus would be on games for mobile devices.

“We’re excited as ever about our movies and TV series offering and we expect a long runway of increasing investment and growth across all of our existing content categories, but since we are nearly a decade into our push into original programming, we think the time is right to learn more about how our members value games,” the company said. Netflix Chairman and Co-Founder Reed Hastings said on the investors’ video Tuesday that the company is exploring other businesses, along with the games space. He confirmed, however, Netflix would continue to rely on its shows and movies for profit and will not monetize the additional services.

Growth projections for Netflix remain elevated. The company said its future guidance forecasts paid net additions of 3.5 million in the third quarter, compared with 2.2 million in the same quarter of 2020.

Shares of Netflix dropped 3% in after-hours trading immediately after the release of the report. The stock pared-back overnight losses and presently, Netflix shares are trading higher by about 0.60% in pre-market hours before the opening bell in New York on Wednesday.

In broad market action, equities on Wall Street surged on Tuesday. Major US indexes, Dow Jones, S&P500, and Nasdaq Composite, all ended sharply in the green as investors jumped back into the market after they retreated aggressively a day earlier. Stock averages ended the day with gains between 1.50% to 1.62%.

In overseas trading, European shares also advanced on the day as investors shifted gears and pared a major part of the losses accumulated the previous day. The region-wide Stoxx 600 advanced a little over half a percent, while country-specific benchmarks finished higher between 0.50% and 0.80%.

Bitcoin and other digital tokens were under pressure on Tuesday but the sell-off could not gather enough momentum. The leading digital currency held steady at around $29,500.