Netflix lackluster first-half US$1.3b income, a reversal from last year

Despite this year’s growth slowdown, Netflix remains by far the world’s biggest streaming service in an increasingly competitive field that includes Walt Disney Co., HBO, Amazon and Apple. Netflix finished June with 209 million worldwide subscribers, AP reports.

Netflix’s heft also has produced steady profits. The company earned US$1.35 billion, or US$2.97 per share, nearly doubling from the same time last year. Revenue grew by by 19 percent from last year to US$47.3 billion.

But the lackluster first-half numbers are a reversal from last year, when government-imposed lockdowns across the world thrust people into binge-watching frenzies while corralled at home.

Already the world’s largest video streaming service when the pandemic began in March 2020, Netflix picked up 26 million subscribers during the first half of last year. .

While no one expected Netflix to sustain that breakneck pace, the drop off in subscriber growth this year has been more severe than anticipated. Netflix shares have fallen by about 10 percent from their peak of US$593.29 six months ago. The shares edged up slightly in extended trading after Tuesday’s news came out.

Netflix management has blamed part of this year’s slowdown to pandemic-induced production delays that left its video service with fewer proven hits.

The Los Gatos, California, is expecting that problem to fade during the second half of this year with new-season releases of popular series such as “Sex Education” and “The Witcher,” as well as movies starring big-name stars such as Leonardo DiCaprio and Meryl Streep.

Even so, Netflix let down investors with a forecast calling for only an additional 3.5 million subscribers during the July-September period. That was well below analyst estimates for a third-quarter gain of 5.6 million subscribers, according to FactSet Research.

The conservative outlook suggests Netflix isn’t expecting an immediate boost from its foray into a highly competitive video game field already contested by far more experienced companies such as Epic Games, Microsoft and Electronic Arts.

But if the move into video gaming pays off, it could eventually give Netflix more leverage to boost its prices.

The company has already been gradually raising subscription costs in recent years, helping to boost its average monthly revenue per subscriber to US$14.54 in its biggest market comprised of the U.S. and Canada. That’s a 16 percent increase from US$12.52 per month two years ago.

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