Netflix battles to reverse subscriber slowdown: Streaming giant turns to video games and gifts to drive growth
Netflix fell short of expectations as it managed to pull in just 1.54m new subscribers between April and June.
The video streaming giant – whose shows include Stranger Things, The Crown and Shtisel – is still gaining paying customers but at a far slower rate than the 10.09m it added over the same period last year when lockdowns boosted business.
Although analysts had expected a slowdown, they had forecast 1.75m new customers to open a Netflix account in the second quarter of this year, according to FactSet – though Netflix itself had guided to just 1m.
Binge-worthy: Jerusalem-based drama Shtisel has been a hit show for streaming giant Netflix
The company’s revenues were up 19.4 per cent over the period to £5.4billion – a more moderate rise than the 24.9 per cent growth it achieved a year ago.
And Netflix advised shareholders that its revenue growth would continue to tail off, predicting sales would rise by just 16.2 per cent in the third quarter.
But profit was up to £991million from £528million a year ago. Analysts said the slowdown was the first sign of the ‘pandemic effect’ on streaming services beginning to cool off.
Netflix’s big lead over rival services has also prompted suggestions it is reaching ‘saturation point’ in markets such as the US. That has led bosses to look for new ways to bring in revenue.
So far their efforts include an online shop launched last month, which sells clothing and toys linked to popular shows including The Witcher and Stranger Things.
But on top of this, Netflix is also looking at potential video games. These would build on 2018’s Black Mirror: Bandersnatch, a show that allowed viewers to affect the story by making choices for the main character.
Analysts remain sceptical about whether its push into games will be successful in the face of competition from established players such as Nintendo, Sony and Microsoft.