Netflix’s Next Episode: Video Games

As Competition Heats Up, Netflix Diversifies

Netflix’s (NFLX) popularity surged during the pandemic as consumers looked for ways to entertain themselves on their couches. The company recently hit 200 million worldwide subscribers, but more in-person entertainment options are now returning, drawing consumers away from their TVs. Netflix is also facing its first serious competition in the streaming space from Disney (DIS), Apple (AAPL), Amazon (AMZN), and other rivals.

As it navigates a changing market, Netflix is looking for new ways to grow and diversify. It sees video games as the next frontier and is making significant investments in building this new arm of its business.

Video Game Spending Expected to Surge

Netflix could face significant hurdles as it works to break into the video game industry. Developing content for video games is often a more complicated process than developing content for shows. But Netflix believes that video games are a booming industry and it is willing to take some risks as it works to enter the space.

Consumer spending on video games around the world is expected to reach $175.8 billion this year and surpass $200 billion by 2023. Much of that spending is expected to come from mobile games, an area where Netflix is focusing. Mobile games are generally less expensive and complicated to develop than computer and console games. They are also easier to stream without lags.

Netflix’s Strategy

To start out, Netflix plans to make video games available on its existing app. It will not charge customers extra for video games in the initial phase of the initiative.

One goal of Netflix’s plan is to encourage customers to spend more time on its platform. It’s easy to watch a TV series in less than a week, but people can spend months or even years engaging with a video game.

The pandemic dramatically changed consumer habits. Companies across industries, from entertainment to fashion to food, are working to adapt to these new trends. Netflix’s investors will be on the edge of their seats to see if the streaming giant’s bet on video games pays off.

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