Netflix Jumps Into The Video Game Race

Internet television network Netflix (NFLX) reportedly plans to add video games to its subscription service next year to keep its customers entertained. Netflix stock wavered on the news.


Netflix signaled the move with a recent executive hire and job postings for game developers. Bloomberg reported late Wednesday that Netflix had hired Mike Verdu as vice president of game development. He previously worked as an executive for Facebook‘s (FB) Oculus division and game publisher Electronic Arts (EA).

Netflix doesn’t currently plan to charge extra for the video game content, Bloomberg said. The games will appear as a new programming genre on the Netflix home screen.

Los Gatos, Calif.-based Netflix has previously licensed the rights to games based on its shows, such as “Stranger Things.”

Netflix Stock Seesaws

On the stock market today, Netflix stock initially rose on the news but turned south in a rough day for the market. Netflix stock ended the regular session down 0.9% to 542.95.

CFRA Research analyst Tuna Amobi looked favorably on the news. He reiterated his buy rating on Netflix stock on Thursday.

“We view video games as a natural progression of its core competencies that would complement its current fare of TV/film content and enhance its overall price-to-value proposition amid intensifying streaming competition,” Amobi said in a note to clients.

The addition of video games could help Netflix sustain moderate price increases to its monthly subscriptions, Amobi said.

Games Could Differentiate Streaming Service

Video games could help differentiate Netflix from streaming video rivals, Truist Securities analyst Matthew Thornton said in a note to clients. Games also could improve subscriber engagement and retention, he said. But many questions remain about the business initiative, including its strategy and scope.

The video games business is not easy, Thornton said. He noted that Amazon (AMZN) and Alphabet‘s (GOOGL) Google have struggled with their game development efforts.

Thornton maintained his buy rating on Netflix stock.

Netflix stock has been consolidating for the past 25 weeks with a buy point of 593.39, according to IBD MarketSmith charts.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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