Netflix
‘s
NFLX
expansion into mobile gaming has kicked off with the launch of five titles on its new Game tab and its first gaming studio buyout. It has acquired Night School Studio — the team behind the supernatural mystery adventure,
Oxenfree
.
The studio’s games including
Afterparty
, which are available on PS, Xbox, Nintendo Switch and PC, will be the first non-mobile titles in the streaming giant’s newly created video game portfolio. Night School is currently working on
Oxenfree 2: Lost Signals
, which is expected to release in early 2022.
Netflix’s first mobile games are currently exclusively available to Netflix subscribers in Europe, and can only be played on Android smartphones and devices. Netflix members in Italy and Spain can play casual mobile games
Shooting Hoops, Teeter Up
and
Card Blast
, along with
Stranger Things: 1984
, and
Stranger Things 3: The Game
.
The games –
Stranger Things 3: The Game
and
Stranger Things: 1984
– were previously paid releases on mobile in Poland but now Polish Netflix subscribers can download the Android versions for free.
According to a report from
Reuters
, each of the games from Netflix will be included as part of users’ Netflix membership and will have no ads and no in-app purchases, much like the TV shows and movies on the streaming platform.
With popular gaming-based original TV shows under its belt, including
The Witcher, Castlevania,
and most recent
Resident Evil: Infinite Darkness
, Netflix is sure to expand its eventual catalog of titles based on the existing Netflix properties and make it available in more countries soon.
Year to Date Performance
Image Source: Zacks Investment Research
Will Video Game Expansion Aid Prospects?
The recent studio acquisition and mobile game launches are just the latest parts of Netflix’s ongoing push into video games. In July, the streaming giant appointed former EA and Facebook gaming executive Mike Verdu who has a track record of working on Oculus and EA game development including
Plants vs Zombies
to lead the project.
The appointment of Mike Verdu is expected to prioritize Netflix’s video game development endeavors, thereby opening up a new source of revenues. This could be the additional content driver that Netflix needs to propel its decelerating global subscription growth back into overdrive.
However, Netflix already faces major competition from Xbox Cloud Gaming, along with
Alphabet
’s
GOOGL
Google Stadia and
Amazon
’s
AMZN
Luna. As these services already offer a great selection of games, especially on Xbox Game Pass, Netflix will need to offer exclusive content if it aims to keep mobile gamers on its platform.
Moreover, other streaming service providers, particularly
Disney
’s
DIS
Disney+ and HBO Max, are catching up fast with this Zacks Rank #4 (Sell) company. Stiff competition has been an overhang on its shares. Year to date, shares of Netflix are up 8%, underperforming the Zacks
Broadcast Radio and Television
industry’s rise of 13.4%.
Netflix’s plan to expand beyond streaming was evident from its e-commerce initiative. In June, the company launched its first owned-and-operated online retail outlet, Netflix.shop, to sell products directly to consumers.
The streaming giant’s focus on developing regional content and expansion into different genres, including kids’ programming, is laudable. The addition of celebrity content creators like Steven Spielberg and Shonda Rhimes has been a game changer.
Netflix is not new to video games or interactive video formats on its service. In 2017, the company launched an interactive video format that allowed users to choose story options for its original productions
Black Mirror: Bandersnatch
and
You vs. Wild
.
Video games have also been created based on its popular show
La casa de Papel (Money Heist)
. Netflix expects third-quarter 2021 revenues to be $7.47 billion, suggesting growth of 16.2% year over year. The Zacks Consensus Estimate for revenues stands at $7.48 billion.
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the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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