Here’s how I can predict Netflix’s video game strategy
We all know Netflix (NFLX). The brainchild of co-founder and CEO Reed Hastings disrupted the entire entertainment complex with its massive global expansion and improved streaming technologies. Remember the video rental giant Blockbuster? Unfortunately, most people under the age of 20 probably don’t. Netflix bankrupted them in 2010.
Remember when Hollywood was in control of which movies to direct? Well, Netflix studios have won Oscars and forced movie moguls to play by their rules. Today, Netflix has more than 207 million paying subscribers worldwide.
But now he has another target in sight. The $ 90 billion video game industry. With several video game producers and related tech companies poised to report profits, let’s take a look at how Netflix could harness the gaming industry over the next 10 years.
How Netflix Succeeds
In 2006, Netflix started out as a movie rental company. Then he was locked in a battle with Blockbuster over monthly DVD rental programs by mail.
People will say times and customers have changed. But it’s the acceleration of streaming and supporting technology that has helped Netflix stand out from the competition. Improved bandwidth, 4G, and faster internet speeds have allowed Netflix to stream movies right to your living room.
The video game industry has also reaped significant benefits from higher and faster internet speeds, improved graphics cards, and more advanced software.
To show that Netflix is serious about its future in gaming, it made a strategic hire last month to lead its new initiatives. Netflix has hired Mike Verdu, a former executive at video game giant Electronic Arts and Facebook. While working at the social media giant, he oversaw a division that brought games and other content to Facebook’s Oculus virtual reality platforms. While at EA, he focused on the popular Sims franchise and Star Wars games.
For now, Netflix says it will offer video games on its main platform as a new genre of programming. However, if you’ve used Netflix before, you know that they segment different categories of programming by subject. So, for example, you’ll see stand-up comedies, documentaries, and movies from the 1980s grouped into separate categories.
Buy versus build?
The question everyone should be asking themselves now is how Netflix plans to build a video game dynasty. When a business wants to jump into a new and growing industry, it usually has one of two strategic options. He can either build the entire business from scratch or acquire a business that already has extensive experience and a strong customer base.
“Buy versus Build” is the subject of lectures and debates in business schools across the country. You will recall that Netflix built its own movie production house from scratch. It relied on strategic partnerships with media companies like Starz. But he never went out and bought a movie studio.
Its rival Amazon (behind the video platform Prime) has also built its own content and film production unit. However, Amazon has fallen behind Netflix in terms of original content. As a result, he boldly decided to buy MGM Studios recently for $ 8.5 billion. Amazon will use the Buy model in its quest to compete with Netflix’s continued dominance.
Netflix, meanwhile, focused on strengthening its content and exploring new opportunities that would benefit its customers. As it moves into video games, it will likely start with mobile games and then expand to its other platforms. So what is Netflix going to do with video games? There are theories that Netflix could buy a video game company. A simple Google search will yield countless click-bait articles speculating that Netflix could buy role-playing game designer CD Projekt or even merge with Electronic Arts or Take-Two Interactive.
But I’ll give you an effortless secret that will tell you what they’re likely to do. All you need to do is check out the company’s job postings. Following the hiring of Verdu, the company posted several job vacancies for members of the game production team. A post for producer, Studio Games reads:
“This is your chance to be at the forefront of Netflix’s new video game offering. We will market these new experiences through the world’s leading streaming entertainment app with 208 million paid subscriptions in more than 190 countries already enjoying TV series, documentaries and feature films in a wide variety of genres and languages. .. “
And a post for Product Designer, Games Platform reads:
“We are looking for a leading product designer to push the boundaries of interactive experiences on Netflix. Working with the world’s top game developers, we leverage our product and content expertise to design experiences where viewers interact and interact with game content in new and memorable ways. This role will work closely with a talented team of designers, product managers, engineers and external game partners to help millions of viewers around the world discover and enjoy their next interactive experience on Netflix.
Read the language carefully. Netflix will develop its video game platform. At least to begin with. This strategy is important because there is no risk that the business will have to issue new debt or take a hard hit by buying a business and chomping on its cash flow.
Now, it’s not going to be easy for Netflix to become a video game producer. Companies like Apple, Facebook, and Amazon have all struggled with games. But given Netflix’s massive platform and ease of access for over 200 million accounts, it has the backing technology. Also, given its success in partnering with companies before going into its own content production, this could be a very slow and successful endeavor.
It will be interesting to listen to earnings calls from companies like Electronic Arts (EA) and Take-Two Interactive (TTWO) to see if they see Netflix as a competitor or a collaborator. It looks like this $ 90 billion gaming industry has a new entrant. So let’s sit down and watch the battle.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.