Netflix Signals No Revenue Planning as It Adds 1.5 Million Subscribers

The streaming giant told investors on Tuesday that while its competition is growing and rivals are joining together to create a more formidable entertainment platform, it doesn’t have to be bigger to compete.

“We don’t see any assets as ‘must-haves’ and we haven’t found large-scale assets attractive enough to pursue,” Netflix said in a second-quarter letter to shareholders.

The company says that the potential of streaming is driving the deal but it does not believe the consolidation of the media the last few years has affected its growth.

“We’re mostly competing with ourselves to improve our services as fast as we can. If we do, we’re confident of maintaining a strong position and continuing to grow as well as we did for the past two decades.” Netflix said.

The Netflix announcement came as the company said it added 1.5 million memberships in the second quarter as the streaming giant continued to see slower new customer growth following last year’s surge at the peak of the Covid-19 outbreak.

Netflix says that the pandemic has created what it calls “lumpiness” in its membership growth, referring to higher growth last year and slower growth this year. The company says it has 209.2 million customers worldwide. The stock did not change in trading over time.

The global leader in streaming’s approach to acquisitions is the opposite of another entertainment industry, which is in the deal -making phase in hopes of amassing a content giant that could be a great competitor to Netflix.

In May, AT&T Inc.

and Discovery Inc.

agreed to combine their media operations into a new stand -alone company whose assets include HBO Max, CNN, Discovery + and film and TV studios Warner Bros. Last month, Amazon.com Inc.

made a deal to acquire MGM for $ 6.5 billion in hopes of using the libraries and intellectual property of well -known film and TV studios to enhance Prime Video’s streaming services.

The agreement may not be finalized. Comcast Corp.

, parent of NBCUniversal and ViacomCBS Inc.

has discussed creating streaming partnerships for international markets, according to people familiar with the matter.

While Netflix turned down the offer, it wanted to grow new business, especially gaming. Last week, the company hired Facebook executive Mike Verdu as vice president of game development. The company says it will focus on games for mobile devices and will likely rely on Netflix shows and movies for content. Games will be included at no additional cost to Netflix members.

“We feel it’s time to find out more about how our members value the game,” the company said in a letter to its shareholders.

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Netflix Chairman and CEO Reed Hastings said in a video of the company’s investors on Tuesday that the games and other side businesses the company is exploring, such as retail, are not meant to become new profit centers or take over its content operations.

“We’re a one -product company with a lot of supporting elements,” said Mr. Hastings.

Netflix’s addition of 1.5 million subscribers for the three -month period ending June 30 exceeded previous forecasts for an additional one million memberships. That number increased by 10 million in the second quarter of the previous year, when much of the world was in key mode.

Total revenue at the Los Gatos Calif. Company increased to $ 7.34 billion, compared to $ 6.15 billion a year earlier. Wall Street expects $ 7.32 billion, according to FactSet.

Profits on Netflix rose to $ 1.35 billion, or $ 2.97 per share. A year earlier, revenue was $ 720 million, or $ 1.59 per share. Unexpected turnover for GAAP earnings of $ 3.18 per share.

The Asia Pacific region is the strongest company in terms of new members, responsible for nearly 70% of the additional 1.5 million customers. In the U.S. and Canada, the streaming giant lost 400,000 subscribers – the first time it has done so in the market since the second quarter of 2019.

Engagement among Netflix subscribers also declined during the quarter compared to the same period last year. However, the metric is up 17% over the second quarter of 2019.

Netflix expects a stronger third quarter as media production delays ease and fresher content becomes available. The company said it forecasts a net paid increase of 3.5 million, compared to 2.2 million in the third quarter of 2020.

The pandemic continued to hamper Netflix’s original content lineup for the quarter, but the company said it expects to have strong volumes for the rest of the year.

Write to Joe Flint at joe.flint@wsj.com

Corrections & Amplifications
In May, AT&T Inc. and Discovery Inc. agreed to consolidate their media operations into a stand -alone company. An earlier version of this article misidentified Discovery Inc. as Discovery Communications Inc. (Corrected July 20, 2021.)

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