Inside the Stream – No ads for Netflix, not even in games
Netflix survived Q2 2021 with only a small loss of subscribers in the US and Canada. But if investors were hoping for a new revenue stream for the company, they were out of luck. There will be no ads for Netflix, not even in the company’s new games services.
Part 1: Top stories (1:30)
Part 2: Netflix Q2 2021 results (5:45)
Netflix forecast it would have a slow quarter from the perspective of subscriber growth. It forecast a gain of 1 million subscribers but did slightly better, delivering a gain of 1.5 million to reach 209.2 million worldwide subscribers. The United States and Canada saw a decline of 400,000 from Q1, higher than the 100,000 drop in Q2 2020 and only the second time the company has lost subscribers in the region.
Asia-Pacific was the fastest-growing region, adding 1 million subscribers to reach 27.9 million. Latin America added 0.8 million, reaching 38.7 million, and EMEA inched up 0.2 million to reach 68.5 million.
Part 3: Netflix is a one-product company (11:40)
In the earnings call, Netflix co-CEO Reed Hasting stated unequivocally that the company is a one-product company. Even though it is introducing new businesses like gaming, the company still expects it to be in service to the main SVOD business.
Part 4: The new games service (14:00)
Company executives made it clear that the function of the games service is to extend the entertainment brands it has established. Greg Peters, COO, and CPO stated explicitly that it would have no ads in the games nor in-game purchases.
Part 5: The Netflix merchandise store (17:10)
Netflix launched a merchandise store in the last quarter. The company says the objective of the business is to help grow the visibility of the company’s franchises, like Stranger Things and Witcher.
Part 6: No discussion of an ad-supported tier (19:00)
Will is frustrated that there was no discussion of an ad-supported tier. Company executives continue to make it clear that there will be no ads for Netflix anytime soon.
Part 7: What about a licensing business? (20:00)
There were rumors that Netflix was considering licensing some of its content to other services. I was surprised that this wasn’t discussed on the earnings call.
Part 8: Ad tier rant part 2 (22:00)
Will further explains why the ad-supported tier makes sense for Netflix. I agree that Netflix could add a cheaper ad-supported tier and end up making more money overall.
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July 22, 2021 at 04:54PM