Netflix to move into video games as its growth slows

San Ramon: Netflix reported its worst slowdown in subscriber growth in eight years as people emerge from their pandemic cocoons. So it’s adding a new attraction to its marquee: Video games.

On Tuesday, the video streaming giant announced it will offer video games in its existing subscription plans at no extra cost. The confirmation of the long-anticipated expansion came in conjunction with the release of its latest earnings report..

That confirmation of the long-anticipated gaming expansion came in conjunction with the release of Netflix’s latest earnings report. That financial breakdown showed the video service added 1.5 million subscribers during the April-June period.

That’s slightly better than the modest increase that management forecast after the service stumbled to a sluggish start during the winter months, but still far below its growth rate in recent years.

The 5.5 million subscribers that Netflix gained through the first six months of this year represents its weakest first-half performance since 2013 — a time when the company was still rolling out more original programming instead of licensing old TV series and movies.

Now Netflix is taking another leap by offering video games. The Los Gatos, California, company telegraphed the move last week when it disclosed the hiring of a veteran video game executive, Mike Verdu, to explore potential opportunities in another field of entertainment.

“The reason we’re doing them is to help the subscription service grow and be more important in people’s lives,” Netflix co-CEO Reed Hastings told investors during a Tuesday discussion.

Greg Peters, Netflix’s chief product officer and the executive who will oversee what he described as a multi-year expansion, said the company will initially focus on mobile games before eventually expanding to consoles and TV sets as well. The games initially will be tied to Netflix’s most popular programming, Peters said, but standalone titles may be added to the, mix too. He even speculated that Netflix eventually may create a TV series or film inspired by one of its video games.

“There’s a a big, big prize here, and our job is to be really focused,” Peters said.

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.

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

But the lackluster first-half numbers are a dramatic 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. .