Netflix’s foray into video games is “inconsiderate”, Wedbush analyst says

Netflix subscriber growth is in stall in recent quarters like new streaming services have entered the fray. In an effort to attract in new members and reduce churn, the company is expanding into the world of video games.

The move builds on The huge Netflix library of content and would allow the company not only to extend its intellectual property property, but collect important data on its users. These games could feed future Netflix shows and movies, reinforcing the brand’s appeal to its customers.

While subscribers might be excited about the prospect of games based on hit shows like “Stranger things”, at least one Wall Street analyst he is wary of Netflix’s foray into video-game space, calling it a “reckless raid”.

“While it burns cash, the company has chosen to expand its own content offering to include podcasts (we think it’s smart) e games (we think this is not smart), “wrote Michael Pachter, an analyst at Wedbush, in a research note Wednesday.

Pachter said podcasts are inexpensive to produce, and they would allow Netflix subscribers consume more content while on the via. However, video games I’m not a bass-cost opportunity.

“While Netflix has commented that it will initially focus on mobile games, we wonder if the company has any ideas how difficult the mobile games business became, “he wrote.” The business the cemetery is scattered with the corpses of content companies that have failed in doing mobile games, with Disney the most important failure. Also video game publishers like Activision, EA, Take-Two, Ubisoft and Nintendo have tried for years to create compelling mobile content, and each has lasted success only through the acquisition. “

Netflix said its video games would be offered as part of your existing subscription plans without extras cost, but did not disclose when this new the service will be launched or specific thing games it will develop.

Pachter said Netflix could face “significant obstacles” trying to attract new public for his games, in particular because it tries to entice new users.

“If the company creates mobile games, it is unlikely to create more of a handful for year in the context of over 40,000 new mobile games each product year”he said.” Few of the 3.5 billion mobile players in the world want add a subscription to Netflix in order of access is from 2 to 3 new games every year. “

If Netflix in the end moves in more sophisticated games, it also faces technological hurdles. The majority of video games I am alone available on console dedicated or personal computer. Hence, Netflix is ​​expected to develop a way for streaming games seamless online.

“To the best of our knowledge, only Sony, Microsoft, Google and Amazon have made whatever progress in streaming games, with Sony acquires two companies (Gaikai and OnLive) which have spent cumulatively over $ 1 billion attempts (and failures) e with Microsoft, Google and Amazon the three leading cloud service providers in the world. “

Pachter said if Netflix can understand out how for streaming games, He will do it also need to provide users with a game controller that work on different platforms. After all, Netflix users access content in a myriad of ways.

“This is complex stuff and we think while Netflix is ​​vast plans for succeeding in games, began his efforts with half- Vast ideas, “he said.” In ours view, investors gave to Netflix way too much credit for pulling off this ambitious (some might say bold) effort. “

Netflix will likely tilt heavily on Mike Verdu, who he held the position most recently of vice president of increased reality is virtual reality content on Facebook. The company announced he had hired him last week. Verdu also worked at gaming Electronic Arts, Kabam, Zynga and Atari companies.

Patcher was also critical of Netflix’s choice of Verdu.

“Mr. Verdu is an expert game designer, but did not produce games for about 20 years, “he wrote.” His oversight to others game company has been varied (stops at Atari, EA, Zynga, a startup, Kabam, EA again and Facebook) with five of those jobs in the last 12 years. While he worked for mobile developers, his experience it’s limited, as Zynga has produced its own first mobile game after him left the company, Kabam was only sold two years after its arrival, and it was in EA for a period of no growth. “

Netflix could also struggle capitalize on its intellectual property property, Pachter said. With 20 years of experience covering the video game industry, said it is successful games based on television shows have been limited.

“While there are some based on books with television spin-offs (“The Witcher” and “Game of Thrones “), the number of succeeded games based on television shows it’s pretty limited, “he said.” Likewise, the number of succeeded games based on movie franchising is almost as limited, with games like Harry Potter, Star Wars and Lord of the rings created on the basis of iconic film franchises. “

“We wonnon hold our breath waiting for Netflix to deliver the next iconic film franchise, “said Pachter.

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