[ad_1]
Growth in Netflix subscribers has stagnated in recent quarters as new streaming services have entered the fray. In an effort to attract new members and reduce the churn rate, the company is expanding into the world of video games.
The move builds on Netflix’s huge library of content and would allow the company not only to expand its proprietary intellectual property, but also to collect important data about its users. These games could fuel future Netflix shows and films, strengthening the brand’s appeal to its customers.
While subscribers may be excited about the prospect of games based on hit shows like “Stranger Things,” at least one Wall Street analyst is wary of Netflix’s foray into the video game space, calling it a ‘”ill-advised incursion”.
“As it burns money, the company has chosen to expand its content offering to include podcasts (we think it’s smart) and games (we think it’s not smart),” said writes Wedbush analyst Michael Pachter on Wednesday.
Pachter said podcasts are inexpensive to produce and would allow Netflix subscribers to consume additional content on the go. However, video games are not a low cost opportunity.
“While Netflix has said it will initially focus on mobile games, we wonder if the company has any idea how difficult the mobile gaming industry is,” he wrote. “The corporate graveyard is littered with the corpses of content companies that have failed to make mobile games, with Disney the biggest failure. Even video game publishers like Activision, EA, Take-Two, Ubisoft and Nintendo have tried for years to create mobile content, and each has only had lasting success through acquisition. “
Netflix has said that its video games will be offered as part of its existing subscription plans at no additional cost, but has not disclosed when this new service will launch or what specific games it will develop.
Pachter said Netflix could face “significant hurdles” in trying to attract new audiences for its games, especially when looking to attract new users.
“If the company makes mobile games, it is unlikely to create more than a handful per year in the context of the more than 40,000 new mobile games produced each year,” he said. “Few of the world’s 3.5 billion mobile gamers will add a Netflix subscription to access its 2-3 new games each year.”
While Netflix does eventually move into more sophisticated games, it also faces technological hurdles. The majority of video games are only available on dedicated consoles or personal computers. So, Netflix should develop a way to stream games online seamlessly.
“To our knowledge, only Sony, Microsoft, Google and Amazon have made any progress in streaming games, with Sony having acquired two companies (Gaikai and OnLive) that have spent a total of over $ 1 billion to try ( and fail) and with Microsoft, Google and Amazon, the world’s three largest cloud service providers, ”Pachter noted.
Pachter said that if Netflix understands how to stream games, it will also need to provide users with a game controller that will work on different platforms. After all, Netflix users access content in multiple ways.
“These are complex things, and we believe that while Netflix has big plans to be successful in games, it started its efforts with half-big ideas,” he said. “In our opinion, investors have given Netflix far too much credit for making this ambitious (some might say bold) venture successful. “
Netflix will likely rely heavily on Mike Verdu, who most recently served as vice president of augmented reality and virtual reality content at Facebook. The company said it hired him last week. Verdu has also worked for game companies Electronic Arts, Kabam, Zynga and Atari.
Patcher also criticized Verdu’s choice of Netflix.
“Mr. Verdu is an experienced game designer, but has not produced games for about 20 years,” he wrote. “His oversight at other game companies has been varied (stopping at Atari, EA, Zynga, a startup, Kabam, EA again and Facebook) with five of these jobs over the past 12 years. he worked for mobile developers, his experience is limited, given that Zynga produced his first mobile game after leaving the company, Kabam was not sold until two years after his arrival and he was at EA for a period without growth. “
Netflix might also find it difficult to capitalize on its intellectual property, Pachter said. With 20 years of experience in the video game industry, he said hit games based on TV shows are limited.
“Although there are some based on books with TV spinoffs (‘The Witcher’ and ‘Game of Thrones’), the number of hit games based on TV shows is quite limited,” he said. -he declares. Likewise, the number of successful games based on movie franchises is almost as limited, with games like Harry Potter, Star Wars and The Lord of the Rings created based on iconic movie franchises.
“We won’t hold our breath while we wait for Netflix to deliver the next iconic film franchise,” Pachter said.
[ad_2]
Source link