“Netflix” is counting on video games to continue to attract subscribers

“Netflix” is entering the field of video games in an effort to diversify its activities in light of the glut that began in its main market, which is video on demand, which confirms that the expansion towards the gaming sector has become an inevitable step for any major streaming platform.

The goal is to "strengthen and improve the services" of the platform, "not to create a separate revenue stream," Netflix co-founder Reed Hastings said at an online analyst conference Tuesday, after the quarterly results were published. At no additional cost, Netflix will add games initially designed for smartphones and tablets to its existing subscribers.

Netflix said in a statement that video games will form a "new category" for it, along with its expansion "in the categories of films, animation and TV shows." The number of subscribers to the video-on-demand platform has reached 210 million.

In the second quarter of this year, “Netflix” achieved a net profit of $1.35 billion, about double what it had achieved last year, but this result remained below the market’s expectations, which worried that the platform would gradually lose its lead over the many competing platforms.

The group expressed its satisfaction that the growth in the number of subscribers exceeded its expectations, and indicated that the high demand for video-on-demand during the pandemic phase was preventing normal comparisons.

But this fact does not change the conclusions of analysts, according to which "Netflix" appears to have reached the degree of "glut in the United States", as Eric Hagstrom of eMarketer noted.

Competition with traditional television, and

although he pointed out that the company “managed to raise prices and increase its revenues, despite the escalation of competition with cheaper platforms,” he stated that “Netflix” lost a large share of the market to Disney.

The platform generated $7.3 billion in revenue from April to June, an increase of 19 percent.

As for the third quarter, it counts on additional 3.5 million subscribers to join it, a level of growth over two years equivalent to that before the pandemic.

The result should reassure investors who are wondering whether Netflix will see a slowdown, having benefited significantly last year from the shutdowns linked to the health crisis and its position as a leading streaming platform.

The competition has become fierce, with old platforms, including "Amazon Prime Video", and new ones, most notably "Disney Plus", "Apple TV Plus" and "HBO Max", as well as "Peacock" and "NBC Universal".

Added to these are the entertainment platforms that attract consumers, from video games to social networks.

Netflix confirmed that its expected profits remain huge given that streaming broadcasts currently represent only 27% of the time people spend in front of television screens in the United States, of which 7% is for “Netflix,” compared to 63% for TV stations known as “Netflix.” "Traditional", according to what the group quoted a study conducted by the company "Nielsen".

Attracting players,

and “Netflix” confirmed its confidence in its “growth reserves,” noting that it is still “less mature in other countries,” and that “this does not include mobile phone screens (where its share of attracting users is less).”

However, increased interest does not necessarily translate to improved revenue under a subscription-based rather than advertising-based business model.

With this in mind, Netflix has resorted to diversifying, with an online store of derivatives, and hiring a video game manager this month.

COO Greg Peters said the subscription-based workflow will allow developers to not have to worry about the amount of ads or players buying rewards.

"Our profession is to create worlds and characters that are beyond imagination, and we know that viewers want to go further."

Investor Jane Munsters of Loop Ventures said on Twitter that entering the video game business "is a good tactic to maintain existing subscribers, and even attract new ones."

He pointed out that "there are about two billion players a month in the world."

Eric Hagstrom considered that “new revenue sources such as derivative products and potential future experiences such as platform films in cinemas, podcasts and video games, can generate growth.”

But he admitted that "success in these areas is not at all guaranteed."

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