Netflix will expand into video games in the next year, expanding from its primary business of TV and movies as the world’s biggest subscription video service.
This would move Netflix into a major entertainment segment — gaming — that it sees as some of its stiffest competition for your attention.
Netflix confirmed on Wednesday that it’s hired a former Oculus, Electronic Arts and Zynga executive, Mike Verdu, as vice president of games development.
Mike Verdu will join Netflix as vice president of game development, reporting to Chief Operating Officer Greg Peters, the company said on Wednesday. Verdu was previously Facebook’s vice president in charge of working with developers to bring games and other content to Oculus virtual-reality headsets.
The crux is to offer video games on Netflix within the next year.
The games will appear alongside current fare as a new programming genre — similar to what Netflix did with documentaries or stand-up specials.
The company doesn’t currently plan to charge extra for the content, said the person, who asked not to be identified because the deliberations are private.
Netflix shares gained aabout 2.8% to $563.45 in premarket trading Thursday.
The stock had been up 1.3% this year through Wednesday’s close.
Netflix has been looking for ways to expand into new arenas, specially in more saturated markets like the U.S.
It already has built kids’ programming, opened an online shop to sell merchandise, and tapped Steven Spielberg to bring more prestigious movies to its lineup.
The streaming giant is still well ahead of rivals such as Disney+ or HBO Max, but it added fewer subscribers than expected in its most recently reported quarter.
Pushing into games would be one of Netflix’s largest moves yet.
Netflix will be building out its gaming team in the coming months, according to the person familiar with the matter.
The company has already started advertising for game-development related positions on its website.
“This feels like a significant event with broad ramifications across the video-games landscape,” Citi analyst Jason Bazinet wrote in a note Thursday.
He said Netflix’s move creates “obvious risks” for larger game developers and publishers.
Video games give Netflix another way to lure new customers and also offer something none of its direct competitors currently provides. Walt Disney Co., AT&T Inc.’s WarnerMedia and Amazon.com Inc. all have access to live sports, but they don’t have gaming within their main video services.
Eventually, this move may make it easier for Netflix to justify an increase in price, down the line.
Games also serve the purpose of helping market existing shows wonderfully.
This news jolted shares of GameStop Corp., the video-game retailer that’s been attempting a comeback.
It fell as much as 7.5% in premarket trading Thursday.
Netflix also has made earlier forays into interactive programming, such as choose-your-own-adventure-style shows.
It created versions of programs like “Carmen Sandiego” and “Black Mirror” in that format, which stops short of being a true video game.
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Source : Bloomberg