Netflix (NFLX – Free Report) recently announced the creation of its own game development studio in Helsinki, Finland, with Marko Lastikka as the director. The latest studio expands the streaming giant’s mobile games development initiatives.
Netflix also announced a new feature, game handles, for a more customized gameplay experience.
Netflix has been taking the route of acquisitions to expand its footprint in the gaming industry. Since launching its game initiative in November 2021, the company has acquired Finland’s 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 inking a partnership with Ubisoft, under which, three mobile games will be developed exclusively for its users. The games based on the Valiant Hearts, Mighty Quest and Assassin’s Creed franchises will be available beginning in 2023. The games not will include ads or in-game purchases.
Netflix is expanding 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.
This Zacks Rank #3 (Hold) company is planning to release 30 new gaming titles on its platform by the end of this year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Netflix’s Expanding Game Portfolio to Keep Users Engaged
Netflix’s ongoing push into video games aims at improving viewers’ engagement with the platform amid rising competition in the streaming space. It is facing tough competition from the likes of Disney (DIS – Free Report) , Comcast (CMCSA – Free Report) and Paramount Global (PARA – Free Report) .
Netflix is suffering from stiff competition in the streaming space from the likes of Disney+, Amazon Prime Video, Apple TV+, HBO Max, Peacock, Paramount+ and TikTok. Moreover, the unfavorable impact of account sharing, a weak economy, multi-decade-high inflation and the Russia-Ukraine conflict is expected to hurt profitability.
In the second quarter of 2022, Netflix lost 0.97 million paid subscribers globally, lower than its estimate of losing two million users. It had added 1.54 million paid subscribers in the year-ago quarter. The company currently expects to gain one million paid subscribers in the third quarter of 2022.
Netflix’s shares have declined 62.8% year to date compared with the Zacks Consumer Discretionary sector’s decline of 40.7%.
Upcoming Ad-Tier to Boost Prospects
In June, Netflix confirmed that it is set to launch an ad-supported tier to bring more users to the platform. The new tier will cost less than the current ad-free service and is part of a plan to make Netflix more attractive to cost-conscious consumers.
The company recently hired two of Snap’s top executives to help build its ad business. The company has already inked a partnership with Microsoft, which makes the latter its technology and advertising sales partner.
However, Netflix is expected to face stiff competition in the ad-supported streaming market. Disney+ is also set to offer its ad-supported tier starting Dec 8, 2022. The company has reached out to affiliates and recently signed a new agreement with the ad-tech company, The Trade Desk, as part of an effort to boost the commercial inventory it sells via connected TV.
Comcast’s Peacock also offers a free-to-watch tier with ad support that has about 40,000 hours of content. Peacock is well poised to grow, owing to its vast library of IPs and new productions.
Nevertheless, Netflix is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized, foreign-language content.
