Netflix Inc., marking its first big step beyond TV shows and movies, is planning an expansion into video games and has rented a former Electronic Arts Inc. and Facebook Inc. executives to spearhead the effort.
Mike Verdu will join Netflix as vice president of game development, reported Chief Operating Officer Greg Peters, the company said Wednesday. Verdu was previously Facebook’s vice president tasked with working with developers to bring games and other content to Oculus virtual reality headsets.
The idea is to offer video games on the Netflix streaming platform within the next year, according to people familiar with the situation. Games will emerge in line with current trends as a new programming genre – similar to what Netflix does with documentaries or special broadcasts. The company has no plans to charge extra for the content, said the man, who asked not to be identified because the discussion was private.
Netflix shares rose 3.3% to $ 566 at the end of trading after Bloomberg reported the news. Shares are up 1.3% this year to close Wednesday.
Netflix has been looking for ways to continue to grow, especially in more saturated markets like the US. This includes building it children’s programming, opened an online store to sell merchandise, and tapped Steven Spielberg to bring more prestigious films to his lineup. The company is still far ahead of rivals like Disney + or HBO Max, but it is adding fewer customers than expected in the most recently reported quarter.
Pushing into the game is one of Netflix’s boldest moves. At Verdu, the company has an executive who runs popular mobile games at Electronic Arts, including titles in Sims, Plants vs.. Zombies and Star Wars franchises. He also served as chief creative officer for Zynga Inc. between 2009 and 2012.
Netflix will build its gaming team in the next few months, according to people who know the matter. The company has already started advertising positions related to game development website.
Video games give Netflix another way to attract new customers and also offer something that its direct competitors have never provided. Walt Disney Co., WarnerMedia AT&T Inc. and Amazon.com Inc. all have access to live sports, but they do not have games in their main video service.
Ultimately, the move could make it easier for Netflix to allow price increases in the coming years. The game also serves to help market existing offerings.
A large number of the largest tech companies sell gaming options in addition to their video services. Apple Inc. has a platform called Arcade for games – as well as a TV + service for original video projects. But it costs extra for the game.
What is Bloomberg Intelligence said:
“This is a natural extension of its Netflix content strategy, making it possible to mine intellectual property from popular shows like‘ Stranger Things. ‘ While it may not generate much additional revenue, it will help deepen engagement and increase the appeal and appeal of the service. Don’t expect this to be a turning point, but this suggests that companies will explore new formats to increase time spent on the platform. “
– Geetha Ranganathan, BI media analyst
The news jerked off GameStop Corp., a video game retailer that has been trying to make a comeback. It fell 10% on extended trading on Wednesday.
Evidence of Netflix’s plans to add games is already beginning to appear in files hidden deep inside the company’s apps, according to research by IOS developer Steve Moser shared with Bloomberg.
Netflix has previously licensed rights to games based on its shows – including “Stranger Things” – but this new initiative is much broader. The Los Gatos, California -based company has yet to decide on a game expansion strategy, the man said. In the usual Netflix way, a company might start with just a few games and build from there.
Netflix has also made an initial attack interactive programming, such as your own choice-adventure style show. This makes versions of programs like “Carmen Sandiego” and “Black Mirror” in that format, which are no longer real video games.
Netflix CEOs Reed Hastings and Ted Sarandos have shared their interest in pushing the game in a recent call with analysts. They have also identified the battle-royale shooter game Fortnite as a contender for its customers ’time.
Still, Hollywood studios have a boxy history in the video game business. Several companies have had a lot of success licensing their movies or TV shows for games, and Warner Bros. has made several hit titles at home over the years.
But Disney, the world’s largest entertainment company, shut down most of its in-house gaming operations after years of unsuccessful efforts. Since then the focus has been on licensing Marvel and Star Wars properties for games.
(Update with analyst comments after the 10th paragraph.)