Netflix (NASDAQ:NFLX) is broadening its footprint in the gaming industry by initiating trials of its cloud gaming service in the United States, following earlier test phases in Canada and the United Kingdom. This strategic move builds upon NFLX’s mobile gaming endeavors, which commenced in 2021.
The company has been actively acquiring gaming studios and securing licenses for titles developed by individuals, all part of a broader strategy to make gaming a substantial facet of its operations.
Netflix’s cloud gaming service enables its members to play games on smart TVs and TV-connected devices, including but not limited to Amazon Fire TV Streaming Media Players, Chromecast, LG TVs, Nvidia Shield, Roku devices, Samsung Smart TVs, and Walmart ONN. The company has plans to extend support to even more devices over time.
Players can employ their mobile phones as controllers, with NFLX offering a dedicated app for iPhone users, making it convenient to play games on their televisions. Additionally, games can be played on Macs and PCs using a keyboard and mouse.
As Netflix expands its beta testing in the United States, the company’s focus is on refining its game-streaming technology and enhancing the overall user experience.
Netflix Enhances Gaming Initiatives to Drive Subscriber Growth
Netflix’s approach to gaming sets it apart from traditional gaming consoles. Instead of positioning itself as a console replacement, the company views gaming as a value addition to its existing streaming service.
NFLX is anticipating a surge in revenue growth in the latter half of 2023, driven by the launch of its paid-sharing initiative and an expanding content catalog.
For the third quarter of 2023, Netflix is projecting earnings of $3.52 per share, signifying an approximate 10% increase compared to the figures reported in the same period last year. Total revenues are expected to reach $8.52 billion, indicating a 7% year-over-year growth rate, even on a forex-neutral basis.
The Zacks Consensus Estimate for the third-quarter revenues is currently set at $8.53 billion, suggesting a 7.59% year-over-year increase. Moreover, the consensus estimate for earnings has risen by a penny over the past 30 days, now standing at $3.49 per share.
Netflix has been steadily expanding its gaming portfolio to offer added benefits to its subscribers. Presently, the company’s game library features around 70 titles. These games are included as part of a Netflix subscription, with many of them being inspired by the company’s popular shows, such as “Squid Game,” “Wednesday,” “Black Mirror,” and more. There are also discussions regarding licensing games, including “Grand Theft Auto” from Take-Two Interactive.
Last month, the streaming giant introduced four new games, including titles like “Netflix Stories: Love is Blind,” “Storyteller,” “Ghost Detective,” and “Vikings Valhalla.”
This company has been proactively acquiring gaming studios and establishing its internal game development units to bolster its gaming business. Some notable acquisitions include Boss Fight Entertainment, Night School Studio, and Next Games. Netflix’s cloud gaming service is in competition with other cloud gaming services, such as Microsoft’s Xbox Cloud Gaming, Nvidia GeForce Now, PlayStation Plus, and Amazon Luna.
NFLX shares have returned 20.6% year to date, surpassing the 3% gain in the Zacks Consumer Discretionary sector. This impressive performance can be attributed to a growing subscriber base and a compelling array of content offerings.
In the face of intensified competition from industry giants like Disney (NYSE:DIS), Amazon (NASDAQ:AMZN), and Apple (NASDAQ:AAPL), Netflix is leveraging gaming to keep users engaged on its platform. Disney’s shares have experienced a 2.9% decline year to date, while Amazon and Apple have seen returns of 54.5% and 37.7%, respectively, during the same period.
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Author Faith Yakubu 
