Shares of streaming giant Netflix Inc (NASDAQ:NFLX) got hit after its recent earnings report and a decline in subscribers. Could the company’s bold ambitions of growing its video game library help with churn and bring new subscribers in?
What Happened: Netflix announced intentions to enter the video game space last July and launched its first games later in 2021.
The company has put out several mobile games, including ones based on the company’s shows such as “Stranger Things: 1984” and “Arcane.”
A report from The Washington Post shows Netflix plans to have 50 video games live by the end of 2022.
One recently announced game that could be a big part of the company’s plans is Exploding Kittens. The game is a take on the tabletop card game and Netflix is also creating a show based on the intellectual property.
Netflix is currently only in the mobile games space with its games available on the iOS store from Apple Inc (NASDAQ:AAPL) and Google Play Store from Alphabet Inc (NASDAQ:GOOG)(NASDAQ:GOOGL). The Netflix games are available for free to subscribers.
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Why It’s Important: To date, Netflix has relied on partners and acquired video game companies to grow its video game library. The company is also working on developing its own games.
“We’ve been doing these small acquisitions to build up the know-how and the creative chops to be able to make some really great gains,” Netflix CEO Reed Hastings said during the company’s earnings call.
Netflix has acquired three gaming companies including Next Games, the maker of the Stranger Things mobile game and creators of The Walking Dead mobile game.
Given the ambitious plans to have more than 50 games live in 2022, investors should take note of how serious Netflix is about its plans for the sector.
Along with releasing video games, Netflix is also heavily invested in creating movies and shows based on video games.
The first quarter saw Netflix report a 200,000 subscriber loss, its first decline in quarterly subscribers in more than 10 years. The company ended the first quarter with 221.6 million subscribers.
As Netflix reaches a saturation and slow growth period in the U.S., the addition of games could be among the ways to lower churn and justify a recent price increase in a highly competitive streaming market.
NFLX Price Action: Netflix shares were up 5.82% to $199.22 on Thursday at market close.
