Netflix (Netflix Stock Quote, Chart NASDAQ:NFLX) may be known as the king of streaming movies and TV at the moment but it won’t be long before it starts flexing its video game muscle, too, as the competition for viewer eyeballs and now thumbs starts to heat up.
“Currently we’re entering the peak attention economy and there’s an ongoing engagement war going on. Consumers used to have lots of time to allocate to digital propositions and companies saw this opportunity and started to roll out services which consumers readily adopted,” said Karol Severin, lead gaming analyst at MIDiA Research, to CNBC on Tuesday.
Severin says video games as well as video content based on games will become an increasingly important segment for Netflix as a way to keep subscribers attached to its platform.
“There are only 24 hours in a day and we believe that consumers have actually maxed out on their available time. They can no longer pile up adoption of services on top of each other but instead they have to start prioritizing between propositions. Just a couple of years ago, companies were competing for customers’ available time but they’re now competing for time that consumers have already allocated,” he says.
Last week, Google gave the public a further glimpse of what its streaming video game service Stadia will look like, including a Chromecast controller and a $9.99 per month price tag. And with Microsoft in the midst of beefing up its Xbox Game Pass subscription service, the battle to see who will become the “Netflix of gaming” is truly on —and will soon involve Netflix itself, which made headlines at this week’s E3 gaming expo with its plans to crank out games related to its original series such as Stranger Things. Severin says the gaming angle, currently a missing piece of the puzzle for Netflix, will become more important to the company as the streaming content space becomes more crowded.
“We’re likely to see more games deals done by Netflix in the future because Netflix is facing the pressure of third-party catalogues being pulled, as we’ve seen with Disney and the Warner catalogue to follow. That means that Netflix is becoming more dependent on its original video content, and games have established fan bases which makes it less risky to release original content rather than investing heavily around building interest in a new show from scratch,” he says.
As far as when Netflix will debut a fully-fledged gaming service, Severin says it’s still a ways off.
“Netflix’s user base has a really significant overlap with gamers. Our survey data shows that 46 per cent of Netflix’s weekly active users play games on mobile or tablet and 33 per cent play on console, which over-indexes significantly compared to the consumer average, so there will absolutely be appetite to do that,” he says.