Netflix Sees An Increase In Paid Subscribers But Failed To Meet Expectations

On Tuesday, shares of subscription-based streaming platform Netflix suffered a dip after the company reported earnings that failed to beat expectations. The company’s revenue beat expectations by only a tiny difference and the company confirmed that it was expanding into gaming as speculated by enthusiasts and experts.

Netflix had the figure for earnings per share at $2.97 which fell short of the $3.16 that analysts had expected, according to Refinitiv. The company’s revenue, however, was slightly higher than analysts, according to Refinitiv, has expected. The company has a revenue of $7.34 billion while analysts had expected the company’s revenue to be $7.32 billion. Amid all the aforementioned figures, the company saw an increase in global net paid subscriber additions. The company added 1.54 million paid users against the 1.19 million addition of paid users that was been expected.

In a letter to its investors, the company said that “COVID has created some lumpiness in our membership growth (higher growth in 2020, slower growth this year), which is working its way through. We continue to focus on improving our service for our members and bringing them the best stories from around the world.”

According to Netflix, its revenue growth in the last quarter was a result of an 11 percent increase in its average paid streaming memberships and an 8 percent growth in average revenue per membership.

For its third quarter, Netflix says that it expects to add more than 3.5 million paid users. The company stated that it has spent around $8 billion in cash on content and expects content amortization to sum up to $12 billion for the fiscal year. “If we achieve our forecast, we will have added more than 54m paid net adds over the past 24 months or 27m on an annualized basis over that time period, which is consistent with our pre-COVID annual rate of net additions,” the company said.

Netflix has confirmed the speculation that it was diving into the gaming world. According to what the company said, it sees gaming as a new category, the same way it saw and made its expansion into original films, animations, and unscripted TV. The company said that potential games will be a part of already existing subscriptions and users will not need to pay extra. The company says that the focus will initially be on mobile games.

“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,” Netflix said.