Can Netflix Make It in Video Games?

The leading video streamer is making a surprising move.

Netflix recently announced plans to get into gaming, starting with mobile games.

In this Fool Live segment, recorded on July 15, contributors Jeremy Bowman, Brian Withers, and Brian Feroldi discuss Netflix’s strengths and weaknesses as it prepares to enter a brand new market.

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Jeremy Bowman: Then in other big news out yesterday was Netflix is getting into video games. They made a couple of big hires from EA and Facebook‘s Oculus division. I think that might be a sign that the company sees that video streaming or shows and movies is maturing but I think this company has a ton of optionality and I’m curious to see what they do with video games. They have a subscriber base of more than 200 million people around the world which is really unmatched by any other streaming company and further down the road, I think advertising is definitely an option. There’s different kinds of content that they haven’t gotten into like news and sports, maybe some more interactive stuff. I think that’s a good sign that they’re getting in the video games and I’m definitely curious to see what management thinks about the third quarter though. Like I said before, their Q2 is probably going to be a little weak but long term, I think. Its CEO Reed Hastings has been great at foreseeing the future of TV and I think they’re still the leader. They’re the best bet in the streaming sector.

Brian Withers: Yeah. I’m glad you brought up the video game thing, Jeremy. I’ve always thought that that should be an element where Netflix has a right to play but I just feel like they’re a decade too late to this. 

Bowman: That could be true. I think it depends on how it plays out. But I think we underrate Netflix’s customer base as a platform to launch into new businesses. I know Disney tried to do this before and it didn’t quite work out so it might not work but at least I appreciate the effort certainly even if it didn’t play out.

Withers: Absolutely.

Brian Feroldi: I wonder how they’re going to do it. Is it going to be like Twitch? Are they going to have people that they’re going to pay? Like they’re going to be streaming because if you had to do inputs to play a video game, that’s a big challenge.

Bowman: Yeah.

Feroldi: Just thinking like, I know that Google Stadia that whole thing was a failure so it’ll be interesting to see what angle they take on it.

Bowman: Yeah. I think Bloomberg reported the story. I assume somebody will ask about it in the earnings call, which is next Tuesday but I think the two are higher so they’re just getting started with the development.