Jul 21, 2021

Netflix is expanding into the competitive mobile gaming market

Netflix has been hinting for a while that it will expand into gaming, but it wasn't until yesterday that it revealed definitive details about its new gaming efforts.

Here is what the company told investors during its quarterly report:

Netflix co-founder and co-CEO Reed Hastings has previously acknowledged that the company needed to be in the gaming space. “We compete with (and lose to) Fortnite more than HBO,” he told investors in 2019.

The streamer's gaming efforts are led by Mike Verdu, a former exec at Electronic Arts and Facebook, recently hired as vice president of game development.

At least one financial analyst has reacted to the gaming news with skepticism. Wedbush analyst Michael Pachter wrote in a research note today:

In its most recent quarter, Netflix added 1.5 million paid memberships, lifting its overall global membership to 209.2 million. But here's a concerning stat that reflects the increased competitiveness of the streaming biz and helps explain why Netflix is looking to games as a new front: in its most recent quarter, Netflix lost 430,000 subscribers in the U.S. and Canada. Even after these subscriber losses, Netflix still has 74 million U.S. and Canada subscribers, more than any other region.