Netflix is King of the market when it comes to streaming services with 39.4% market share, but to remain as King it must keep churning out more content and find new ways to keep its subscribers entertained and happy. Its latest business venture comes in the form of video game streaming and promises to make games playable on every device.
Read on to find out more about the latest move from Netflix.
Gaming on the go with no fuss
Now in its beta test stage, the company’s expansion into the video game industry could be a game changer as it will offer its subscribers gaming on-the-go. No more consoles, no more downloading, and no more heavy lifting, just gaming wherever you are. This may sound like a dream to players as the games will be on the Netflix servers, but will they be able to handle the pressure of storing so much data?
According to reports by CBS News, only a limited number of subscribers from Canada and the U.K. have been selected to experience video game streaming as part of this testing period. Testing of the games has started on TVs and will move to PCs and Macs via the Netflix website soon.
Netflix (NFLX) began to branch out into video games in 2021 with Netflix Games on mobile devices. This was, according to Netflix Vice President of Games, Mike Verdu, the “first step in making games playable on every device where our members enjoy Netflix – TVs, computers, and mobile”.
Verdu also said that “by making games available on more devices, we hope to make games even easier to play for our members around the world” He ended with “while we're still very early in our games journey, we're excited to bring joy to members with games".
Netflix Geeked X Account, November 2, 2021.
For now, the selected players testing the games will be able to use their mobile phones as controllers while streaming on TV. Players on PC will be able to play on the Netflix site using a keyboard and mouse.
The gaming competitors: Sony, Microsoft, Google
Netflix is known for creating its own content when it comes to streaming movies and series. For a long time, it was the only one to do so, but pretty soon Amazon (AMZN), Disney Plus, HBO Max, and Hulu started to also get in on the action. T4 Strategy & Advisory illustrates this in the chart below.
T4 Strategy & Advisory. Netflix Market Share among Top 5 Streaming Services, Subscriber Count, 2020.
Now with the introduction of game streaming, Netflix faces other competitors. Sony backs the video gaming brand PlayStation while Microsoft owns Xbox, which recently announced it will be closing down its 360 store in July 2024.
Google also tried its luck with its cloud gaming service named Stadia in November 2019. After being criticized for its lack of game variety and not delivering the features it promised, Google discontinued the service on January 18, 2023. Even so, Google is a leading technology company and may also be considered as a competitor Netflix should keep its eye on.
Quarter Earnings
Netflix’s latest earnings report shows a net income of $1,487,610, up from $1,305,120 for the first quarter. According to a letter to shareholders on July 19th 2023, this gain was driven by a 6% increase in average paid memberships.
Table of Netflix revenue. Source: Netflix letter to shareholders, July 19, 2023.
For the third quarter, for which we can expect a report on October 16th, Netflix forecasts its revenue will be at $8.5B. This is expected to come from the growth in average paid memberships. As expressed in the letter to shareholders, revenue growth is forecasted to continue for the fourth quarter as the company further profits from “account sharing between households and steadily grow advertising revenue”.
Upgrade of stock
On Thursday August 24th, Jefferies analyst, Andrew Uerkwitz, upgraded the NFLX stock to Buy from Hold and also increased his price target to $385 from $310 per share. The reasoning behind his upgrade is the company’s recently launched advertising tier and its crackdown on password sharing. In his notes to clients, Uerkwitz said advertising video-on-demand, “will be slow to kick in, but when it does (paired with password sharing changes), it should drive top line outperformance".
On the same day Netflix shares were up around 1%. Since January, shares of the streaming giant have been up more than 10% and 15.89% over the past quarter.
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Summary
- Netflix is testing out its video game streaming services.
- Testing has started on TVs and will move to PCs and Macs via the Netflix website soon.
- Netflix hopes to make games even easier to play for its members around the world.
- Netflix has to compete with other gaming services like PlayStation and Xbox.
- Revenue in Q2 grew 3% year-over-year.
- The steaming giant expects its revenue for Q3 to be $8.5B.
- Wall Street has upgraded Netflix stock to Buy from Hold.
- Netflix shares have been up more than 15.89% over the past quarter.