The entertainment landscape has undergone dramatic changes over the past decade. One area of interest is the reliance on recurring media for companies that provide home entertainment. Let’s look at two that have capitalized off of this trend today.
Netflix Inc. (NASDAQ:NFLX) has surged 72% in 2018 but is up only 1.24% month-over-month as of early afternoon trading on May 22. The rise of Netflix and other streaming services represents an existential threat to the business model of traditional cinema. In the first quarter Netflix added 7.41 million streaming customers which crushed estimates. The company saw revenue surge 43% year-over-year to $3.6 billion.
Electronic Arts Inc. (NASDAQ:EA) is the largest third-party video game publisher in the world. EA has absorbed criticism over the years for its commitment to microtransactions, which is a business model where users can purchase virtual goods via micropayments. Stars Wars Battlefront II received a barrage of criticism for its reliance on this model.
EA and other video game publishers have become increasingly reliant on subscription-based games to fuel an active online community rather than rely solely on sales for standalone releases. According to the NPD Group and Entertainment Software Association (ESA), the U.S. video game industry earned $36 billion in revenues in 2017. This was up 18% from 2016.
In fiscal 2018 EA saw digital net bookings grow 17% year-over-year to $3.53 billion and players engaged in competitive gaming for FIFA 18 and Madden 18 grew to nearly 18 million, representing a 75% increase from the prior year.
