Will Netflix’s Gaming Expansion Help Its Stocks Flop?
Netflix and other entertainment streaming services became a godsend to people worldwide at the height of the COVID-19 pandemic when people were forced into their homes and away from public spaces. However, as the world opens up, other more competitive streaming services start vying for a market share, and we face new economic challenges; Netflix has suffered as the stock values see a drop.
Of course, Netflix will come up with a game plan like this! With its stock recently plummeting to its lowest in more than four years – it’s alarming for the streaming giant at the top of its game only a while back. But questions still remain. Will its expansion help stocks pick up speed and possibly soar to an all-time high? Or will it have an adverse effect and encourage stocks to plummet even further? And what about its expansion to gaming, will this be limited to video games directly related to their patented series and films, or will it diversify even further and branch out and offer regulated casino games.
Let’s look at the prospects for Netflix’s future in a little more detail.
Subscribers Losing Interest
Despite being in existence since 1999 as a DVD subscription service, Netflix only started to take the world by storm after 2010, when the streaming feature was launched. The number of Netflix subscribers increased steadily over time.
However, more recently, Netflix has seen its popularity dwindle. In the first quarter of 2022, Netflix’s total number of subscribers declined by about 200,00 to 221.64, and the trend looks to continue as we move into the second quarter, with the subscription service predicting a loss of a further 2 million subscribers.
But Why?
As Netflix continues to extend its product catalogue, it is surprising to see such a marked decline in subscribers, which begs the question as to why people have lost interest in the streaming service so dramatically.
This slowdown is mainly said to be a result of competition from alternative video streaming platforms being offered by the likes of Walt Disney, Discovery, HBO Max, Warner Bros and Amazon Prime.
Another factor that could help account for Netflix’s loss in popularity could be the fact that the company recently announced it would crack down on password sharing. Netflix also toyed with the idea of developing a more cost-effective, ad-supported tier for those viewers who are more ’ad tolerant’, indicating there was an acknowledgement that it needed to act fast to retain its current audience and attract new subscribers.
Is Venturing Into iGaming The Answer To Netflix Problems?
Towards the end of 2021, Netflix announced that it would be following in Amazon’s footsteps by making a foray into the world of gaming.
While throwing some select games into the mix might be a bonus for some customers, it looks unlikely to stop the bleed, so to speak. As the Amazon example had shown, the gaming arm of their venture struggled and lost money for years before they were able to develop the multiplayer online game New World, which really made a positive impact on games.
Amazon’s extensive gaming portfolio includes Fire OS games, Twitch which is a popular game streaming service and Luna, which is a cloud gaming platform. So Netflix is going to need to invest a lot of cash if they want to level the playing field. This is money that could be better spent doing what they are good at – producing new shows and movies instead.
Other Income Channels For Netflix?
Netflix clearly believes that adding retail items and tie-in games to their repertoire can serve to boost the popularity of the shows and movies available on the streaming platform. For instance, we’ve seen the parallel of the launch of a video game and animated series for Exploding Kittens, which is great for fans of this particular franchise.
Netflix Co-CEO Ted Sarandos also expressed his confidence in building a ‘big revenue and profit stream by adding games’ over the long term. This diversification strategy certainly has its strengths, but it could be more sense financially for Netflix to license its content to more experienced video game development studios in the saw way that Disney has done.
The same goes for Netflix’s foray into the retail world, where licensing out to apparel retailers with online infrastructure is likely to prove more lucrative than investing in their own stores.
The Future of Netflix
Netflix is a company that has demonstrated pragmatism and ingenuity in the past. Having successfully transformed itself from a mail-based DVD rental outfit to the world’s foremost paid streaming platform, it is clear that this is a dynamic enterprise.
With that being said, it isn’t clear whether the next stage of Netflix’s evolution will be as successfully, seeing as its core target market has shown signs of becoming more fragmented as new exciting players saturate the entertainment scene.
Diversifying its portfolio and venturing into new markets in order to expand its portfolio isn’t a bad idea per se. But it is unlikely that releasing a few tie-in games will help retain subscribers or attract new ones.
At the end of the day, the success or failure of Netflix’s video game venture won’t make or break the company in terms of short-term growth. However, recent expansion moves are signs that the world’s once favorite streaming giant could be in serious trouble.
“Incurable web evangelist. Hipster-friendly gamer. Award-winning entrepreneur. Falls down a lot.”