The Netflix drop in subscribers was just an adjustment from the pandemic, the worldwide leader in streamign is growing and will keep outspending everyone on content, and it plans to become a successful gaming company as well. That’s the takeaway from Tuesday’s earnings call and an appearance at TechCrunch Disrupt.
Netflix subscribers rose by 2.41 million last quarter. 1.43 million of those came in the Asia-Pacific region. But all markets grew this time, with the US-Canada region showing the smallest growth, adding 100,000 subscribers. It predicts it will add 4.5 million subscribers this quarter. That’s the last time we’ll get a projection from Netflix though. To clear up a little confusion, Netflix announced it will stop projecting subscribers every quarter. Which means it will report its subscriber numbers each quarter, but it won't predict what subscriber numbers will look like for the next quarter.
Netflix thinks it wil get double the growth this quarter because of big releases like the Crown, as well as the seasonal upsurge from the holidays. A cheaper ad-supported tier launches in November, but it isn't expected to add much right away. And the crackdown on password sharing won't go global until 2023.
So, a lot of the armchiar analysis has provid to be off. Password-sharing and the ad tier aren’t desperation moves to save a falling company. And it also won’t cut back its spending. Netflix is spending $17 billion on content this year and Co-CEO Ted Sarandos said "I think we’re spending at about the right level."
Netflix also repeated its commitment to the binge release model. It wrote in its shareholder letter “We believe the ability for our members to immerse themselves in a story from start to finish increases their enjoyment but also their likelihood to tell their friends, which then means more people watch, join and stay with Netflix.” Netflix showed a line graph comparing the spike in Google searches related to its Dahmer series— which was released all at once— to lower weekly spikes of seacrhes related to Amazon's Lord of the Rings. It also said “It’s hard to imagine, for example, how a Korean title like ‘Squid Game’ would have become a mega hit globally without the momentum that came from people being able to binge it.”
And separate from the earnings report, Netflix VP of Gaming Mike Verdu told TechCrunch Disrupt that Netflix is “seriously exploring a cloud gaming offering,” and is getting ready to open its fifth gaming studio in Southern California, led by Chacko Sonny, former Blizzard EP of Overwatch. Verdu said “For us, delivering games to your TV or to your PC, it’s value-add — like, we’re not asking you to subscribe as a console replacement, so it’s a completely different business model.”
The future of cloud gaming has been, well, cloudy, since Google announced the end of Stadia coming in January, but Verdu specifically said he thought the problem with Google's Stadia was the business model.