What’s Going On Here?Netflix announced better-than-expected earnings late on Thursday, but the only thing investors couldn’t tear their eyes away from was its bleak outlook. What Does This Mean?Over 8 million new subscribers scrolled through their Netflix homescreens last quarter, nudging the company’s total up to 222 million. That helped give its revenue a 16% bump compared to the same time the year before, as well as pushed its profit up by a better-than-expected 12% – all the more surprising given that the company spent more on new content. But even Emily in Paris would struggle to put a positive spin on this: Netflix is expecting to bring in just 2.5 million new subscribers this quarter – far fewer than the 6.3 million analysts were expecting. That’ll seriously hamper the company’s profit down the line, which might be why investors initially sent its stock down 10%. Why Should I Care?For markets: Is Netflix pushing its luck?
Netflix’s disappointing subscriber forecast might partly be down to the announcement that it’s raising its subscription fee in Canada and the US. The company wants to use that extra cash to bolster its pipeline of programs, in hopes it’ll better be able to compete with the likes of Apple TV, Disney+, and Amazon Prime. And it’s true that Netflix has upped prices before, only to go on to add plenty of new customers in the next quarter. But if this turns out to be one hike too far, it won’t matter what Netflix is making.
The bigger picture: Netflix isn’t playing around.
Netflix has been making a push into mobile gaming too, and it already has a catalog of 12 titles that it might be hoping will broaden its appeal with a new demographic. Smart move: a recent report showed mobile games made up 52% of the entire gaming market last year, and the segment’s growing faster than consoles too. | 