Netflix is introducing movie games and earned $7.34 billion in Q2 from 1.5 million subscribers
Netflix is introducing movie games and earned $7.34 billion in Q2 from 1.5 million subscribers
Netflix has confirmed reports that it is entering the gaming industry. The company revealed in its most recent quarterly report that it will add gaming as another new content category.
The new games will build on the company's previous interactive endeavors, including the Black Mirror Bandersnatch and Stranger Things games. Netflix, on the other hand, says it will initially "be primarily focused" on mobile.
Mike Verdu, a former Facebook vice president of augmented and virtual reality content, has already been hired to assist the company in its push into the gaming market.
The streaming giant's expansion comes at a time when the entertainment industry is undergoing dramatic changes, most notably with Amazon's $8.45 billion acquisition of MGM studios.
Netflix generates $7.34 billion in revenue
Despite this, Netflix remains the streaming industry's leader, reporting a quarterly profit that was slightly higher than expected. Its revenue increased 19 percent year over year to $7.34 billion, slightly above Refinitiv's forecast of $7.32 billion.
A breakdown reveals that the United States and Canada (UCAN) continue to be Netflix's cash cow, accounting for nearly half of its revenue ($3.2 billion). Africa is the second largest market, contributing $2.4 billion. The EMEA region, which includes Africa, is the third largest market, contributing $2.4 billion.
As expected, the rate of new subscriber growth slowed significantly in 2021 without the stay-at-home orders that drew over 16 million new users to the platform in the first three months of 2020.
The company added 1.5 million subscribers during the quarter, exceeding the previous forecast of one million. This is, however, less than the 3.98 new customers it acquired in Q1 2021.
Despite the decline, the streaming giant anticipates adding 3.5 million new customers in the coming quarter. If the company meets its target, it will have a total paid subscriber base of more than 212.68 million.
More than $8 billion spent on content
The battle for global entertainment supremacy continues to intensify. Streaming platforms are now competing for screen time with social media platforms like TikTok and gaming platforms like CODM.
Netflix is investing heavily in content creation and diversity in order to maintain its competitive edge. The company spent $8 billion on content in the first half of 2021 alone. This is an increase of 41% over the previous year.
These investments have largely paid off for Netflix, as its series and specials have garnered 129 Emmy nominations. The Crown, a Netflix series, is now tied for the most nominations with 24. Bridgerton was also nominated for Best Drama Series with 12 nominations, while The Queen's Gambit received 18 nominations, including Best Limited Series.
Shadow and Bone was a popular series in terms of views in the second quarter, streaming to over 55 million "member households." In its first month, Zac Snyder's Army of the Dead reached 75 million households.
Dipping into a bigger pile
As with its video content, the company's new foray into gaming could develop into a significant revenue stream over time.
Last year, the gaming industry outperformed both the film and sports industries combined as the largest revenue generator in entertainment.
Indeed, the gaming industry was valued at $162.32 billion globally in 2020. If the market continues at its current rate of growth, it will be worth nearly $300 billion in five years.
Netflix already has the platform in place to leverage and capture a sizable portion of the market, with over 200 million users.
However, for the time being, upcoming gaming titles will be included in the user's subscription at no additional cost.
In conclusion
Netflix reports that COVID-related production delays resulted in a "lighter" first half of 2021 in terms of content, but the pace will pick up throughout the year.
Its upcoming quarter lineup features new seasons of La Casa de Papel (Money Heist), Sex Education, Virgin River, and Never Have I Ever, as well as live-action films such as Sweet Girl (starring Jason Momoa) and Kissing Booth 3.
Despite the addition of a gaming category, Netflix will not rely on gaming or consumer goods to generate revenue on their own. Reed Hastings, the company's co-CEO, says the company's primary focus is on improving the core streaming service.
