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Why Netflix is getting into video games

The company will offer video games on its service within the next year, according to a report by Bloomberg. The outlet says video games will appear as a new genre on the platform — similar to documentaries and stand-up specials. Bloomberg didn’t get into specifics, but reported Netflix (NFLX) doesn’t plan on charging extra for access to the games.
Video games may seem like an odd match for Netflix, but with competitors like Disney (DIS) quickly catching up, Netflix is looking to see if it can do to video games what it did to Hollywood. Video games are not only a multibillion dollar business, but offering games could give Netflix its Next Big Thing — something critics say it needs right now.

Disney and Comcast’s NBCUniversal have multiple ways to make money, such as selling Iron Man toys and Jurassic Park theme park rides, so the companies’ revenue streams are not intrinsically tied to their new streaming ventures, Disney+ and Peacock. That’s not the case for Netflix.

The company’s primary revenue driver is tied to every subscriber it brings in. So far, business has been booming in that department with Netflix at the top of the streaming mountain. However, it’s growth is starting to look a tad sluggish of late.

The streaming service reported in April it has 208 million subscribers globally, after adding 4 million in the first quarter of 2021. That number missed expectations and the forecasts for its next quarter, which the company reports next week, were also pretty lackluster.

The company has been looking to diversify, and video games could be smart way to do that.

The world of gaming isn’t completely alien to Netflix. The company announced a video game based on its hit original series “Stranger Things” in 2019.
Netflix has hired Mike Verdu to be its vice president of game development and help the company with its gaming efforts. Verdu has a solid pedigree in this world since he was the vice president of content at Facebook Reality Labs, overseeing that company’s virtual reality offerings. He was also the senior vice president of mobile for Electronic Arts (EA) — one of the most significant names in gaming.

Netflix has proven time and time again that it can find success by offering its customers new forms of entertainment.

However, buyer beware when it comes to video games. Other companies have tried — and failed — to make streaming video games work. Google (GOOG), for example, said in February that it’s done making video games less than two years after launching Stadia, its new game platform. Amazon’s gaming strategy with “Crucible,” its “Fortnite”-esque free-to-play game, also wasn’t a success, nor was its Luna streaming video game platform.

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