Netflix NFLX recently announced the creation of its own game development studio in Helsinki, Finland, with Marko Lastikka as director. The latest studio is expanding the mobile game streaming giant’s development initiatives.
Netflix also announced a new feature, game handles, for a more customized gameplay experience.
Netflix has gone down the road of acquisitions to expand its presence in the gaming industry. Since launching its game initiative in November 2021, the company has acquired Finnish Next Games, Texas-based developer Boss Fight Entertainment and Night School Studio, the developer best known for its supernatural mystery adventure Oxenfree.
Netflix’s other initiatives include entering into a partnership with Ubisoft, under which three mobile games will be developed exclusively for its users. The games based on the brave hearts, Mighty Quest and Assassin’s Creed franchises will be available from 2023. The games will not contain ads or in-game purchases.
Netflix expands its gaming portfolio with the launch of Lucky Luna. The company also announced several upcoming games, including: IMMORTALITY, Wild Things: Animal Adventures, Rival Pirates and more.
Netflix, Inc. Price and consensus
Netflix, Inc. price consensus chart | Quotation from Netflix, Inc.
This Zacks Rank #3 (Hold) company plans to release 30 new game titles on its platform by the end of this year. You can view the full list of current Zacks #1 Rank (Strong Buy) stocks here.
Netflix’s Expanding Game Portfolio to Keep Users Engaged
Netflix’s continued push for video games is aimed at improving viewer engagement with the platform amid increasing competition in the streaming space. It faces stiff competition from, among others, Disney DIS, Comcast CMCSA and Paramount Global PAR.
Netflix is suffering from fierce competition in the streaming space from the likes of Disney+, Amazon Prime Video, Apple TV+, HBO Max, Peacock, Paramount+ and TikTok. In addition, the adverse effects of bill-sharing, a weak economy, decades of high inflation and the conflict between Russia and Ukraine are expected to hurt profitability.
In the second quarter of 2022, Netflix lost 0.97 million paid subscribers worldwide, less than its estimate of two million users. It had 1.54 million paying subscribers in the year-ago quarter. The company currently expects to gain one million paid subscribers in the third quarter of 2022.
Shares of Netflix are down 62.8% so far compared to Zacks’ 40.7% decline in consumer discretionary.
Upcoming ad tier to boost prospects
In June, Netflix confirmed that it will launch an ad-supported tier to bring more users to the platform. The new tier costs less than the current ad-free service and is part of a plan to make Netflix more attractive to budget-conscious consumers.
The company recently hired two of Snap’s top executives to help build its advertising business. The company has already partnered with Microsoft, making the latter its technology and advertising sales partner.
However, Netflix is expected to face stiff competition in the ad-supported streaming market. Disney+ will also offer its ad-supported tier from December 8, 2022. The company has reached out to affiliates and recently signed a new agreement with ad-tech company, The Trade Desk, as part of an effort to reduce the commercial inventory it sells through Affiliated TV.
Comcast’s Peacock also offers a free-to-watch tier with ad support that has approximately 40,000 hours of content. Peacock is ready to grow, thanks to its huge library of IPs and new productions.
Nevertheless, Netflix is expected to continue to dominate the streaming space, thanks to its diversified content portfolio, which is due to heavy investments in the production and distribution of localized, foreign-language content.
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