The streaming giant Netflix told investors Tuesday that while its competition is growing and rivals are combining to create more formidable entertainment platforms, it sees no need to get bigger to compete, reports The Wall Street Journal.
“We don’t view any assets as ‘must-have’ and we haven’t yet found any large scale ones to be sufficiently compelling to act upon,” Netflix said in its second-quarter letter to shareholders.
Netflix’s declaration came as the company said it added 1.5 million memberships in the second quarter as the streaming giant continues to see slower growth in new subscribers following a surge last year at the height of the Covid-19 pandemic.
Netflix said the pandemic had created what it called “lumpiness” in its membership growth, referring to higher growth last year and slower growth this year. The company said it has 209.2 million subscribers world-wide. Shares were flat in after-hours trading.
The global leader in streaming’s approach to acquisitions is the opposite of the rest of the entertainment industry, which is in a frantic phase of deal-making in the hopes of assembling content giants that can be formidable rivals to Netflix.
In May, AT&T Inc. and Discovery Inc. agreed to combine their media operations into a new stand-alone company whose assets will include HBO Max, CNN, Discovery+ and the Warner Bros. movie and TV studios. Last month, Amazon.com Inc. struck a deal to acquire MGM for $6.5 billion in the hopes of using the famed movie and TV studio’s library and intellectual property to bolster its Prime Video streaming service.
The deal-making might not be finished. Comcast Corp. , parent of NBCUniversal and ViacomCBS Inc. have discussed creating a streaming partnership for international markets, according to people familiar with the matter.
While Netflix is steering clear of deals, it is looking to expand into new businesses, particularly gaming. Last week, the company hired Facebook executive Mike Verdu as vice president of game development. The company said it would focus on games for mobile devices and would likely rely on Netflix shows and movies for content. Games will be included at no extra cost to Netflix members.
Netflix’s addition of 1.5 million subscribers for the three-month period ending June 30 exceeded its earlier forecast of an additional one million memberships. It added 10 million in the second quarter a year earlier, when much of the world was in lockdown mode.
Total revenue at the Los Gatos Calif.-based company rose to $7.34 billion, compared with $6.15 billion a year earlier. Wall Street had expected $7.32 billion, according to FactSet.
Profit at Netflix increased to $1.35 billion, or $2.97 a share. A year earlier, earnings were $720 million, or $1.59 a share. Earnings missed estimates for GAAP earnings of $3.18 a share.
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