Netflix has finally confirmed reports that it is expanding into the gaming market. In its latest Q2 report, the company revealed that it will be adding gaming as another new content category.
The new games will build on its earlier interactivity projects like Black Mirror Bandersnatch and Stranger Things games. However, Netflix says it first “will be primarily focused” on mobile.
The company already hired former Facebook vice president of augmented reality and virtual reality content, Mike Verdu, to help it push into the gaming market.
The streaming giant’s decision to expand comes at a time when the entertainment scene is seeing huge shuffles especially with Amazon’s $8.45Bn acquisition of MGM studios.
Netflix rakes in $7.34 billion
Despite this, Netflix remains top of the streaming charts, reporting a quarterly earning slightly higher than estimates. Its revenue rose 19% year-over-year to $7.34 billion slightly above the $7.32 billion predicted by Refinitiv.
A breakdown shows that the United States and Canada (UCAN) remains Netflix’ cash cow, contributing close to 50% of its revenue ($3.2billion). The EMEA region, which includes Africa, is the second biggest market contributing $2.4 billion.
As expected, the growth rate of new subscriber numbers slowed dramatically in 2021 without the stay at home orders that pushed over 16 million new users to its platform in 3 months of 2020.
The company added just 1.5 million subscribers during the quarter, which was better than the earlier forecast of 1 million. However, that’s lower than the 3.98 new customers it garnered in Q1 2021.
Despite the drop, the streaming giant is forecasting new customer additions to hit 3.5 million in the next quarter. If the company hits its mark, its total number of paid subscribers will be above 212.68 million.
Over $8 billion on content
The race to dominate the global entertainment space continues to heat up. Streaming platforms now find themselves competing with both social media platforms like TikTok and gaming platforms like CODM for screen time.
To keep its edge, Netflix is investing much in content creation and diversity. In the first half of 2021 alone, the company spent $8 billion on content. This is up 41% from the previous year.
These investments have worked out largely for the company as Netflix series and specials received 129 Emmy nominations. With 24 nominations, Netflix show, The Crown, is now tied for the most-nominated series. Bridgerton with 12 nominations was also nominated for Best Drama Series while The Queen’s Gambit received 18 nominations including Best Limited Series.
In terms of views, Shadow and Bone was a popular series in the second quarter, streaming to over 55 million “member households.” Zac Snyder’s Army of the Dead hit 75 million households in the first month.
Dipping into a bigger pile
Like its video content, the new expansion into gaming could become a significant revenue source for the company over time.
The gaming industry outperformed both movies and sports combined last year as the biggest moneymaker in entertainment.
In fact, on a global scale, the gaming industry was valued at $162.32 billion in 2020. Considering the current growth rate, the market will be worth nearly $300 billion in five years.
With over 200 million users, Netflix already has the platform to leverage and snag a notable portion of the market.
However, for now, upcoming gaming titles will be available at no additional cost as part of the user’s subscription.
Netflix says COVID-related production delays led to a “lighter” first half of 2021 in terms of content, but the pace will pick up throughout the rest of the year.
Its lineup for the upcoming quarter includes new seasons of La Casa de Papel (Money Heist), Sex Education, Virgin River and Never Have I Ever in addition to live-action films like Sweet Girl (Jason Momoa) and Kissing Booth 3.
Despite the addition of the gaming category, Netflix won’t be relying on features like gaming or consumer goods to generate a separate profit. Its co-CEO, Reed Hastings says its focus is on making the core streaming service better.
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