Part 1/11:

# Netflix and the Gaming Industry: A New Frontier or Just a Tease?

As the landscape of entertainment evolves, it appears that streaming giant Netflix may be looking to dip its toes into the world of video gaming. Recent discussions during Netflix's earnings call hinted at the potential for Netflix to venture into this booming industry. In this article, we will explore their current position, the massive growth of video gaming, and whether Netflix has what it takes to succeed in this competitive market.

## The Growing Appeal of Gaming

Part 2/11:

Video gaming has undeniably become one of the most lucrative entertainment industries globally, raking in $179 billion in revenue by the end of 2020. This staggering figure surpasses the combined revenues of the entire film industry and North American sports leagues, highlighting the immense potential for growth and profit within this sector. Recognizing this, Netflix is seemingly pondering how to carve out its slice of the gaming pie.

## A Cautious Approach by Netflix Executives

Part 3/11:

During the earnings call, Netflix co-founder and CEO Reed Hastings was somewhat reserved about the prospect of a gaming division, claiming he does not envision Netflix replicating the success Amazon saw with its transition into cloud services or online shopping. On the flip side, Greg Peters, the Chief Product Officer and CEO, provided a more enthusiastic perspective. Peters mentioned the creation of "deep universes" and "compelling characters," implying that games would serve to strengthen viewers' connections with Netflix's content.

Part 4/11:

Peters pointed out previous successful ventures into interactive narratives, citing projects like "Black Mirror: Bandersnatch" and "Bear Grylls: You vs. Wild." These interactive experiences were not only well-received but also indicated audience interest in enhanced fan engagement through gamification. With games positioned as a significant entertainment medium, Netflix intends to continue exploring this direction.

## Learning from Others: Successes and Pitfalls

Part 5/11:

Despite Netflix’s ambitions, entering the gaming market could prove to be challenging. Industry titans like Amazon and Google have previously struggled to gain a foothold in gaming—most notably with Google's ill-fated Stadia platform. However, Amazon has found some success through Twitch, a gaming platform acquired in 2014, which may serve as a strategic model for Netflix if it decides to pursue gaming further.

Netflix should tread carefully and perhaps avoid direct competition with established console makers like Sony, Microsoft, and Nintendo, instead opting for a model that centers around licensing and production or streaming game content similar to Twitch.

## Alternative Growth Stocks in Gaming

Part 6/11:

For investors seeking promising opportunities in the gaming sector, some companies stand out as potentially better investments than Netflix's speculative gaming endeavor. Here are three noteworthy gaming companies:

### 1. Activision Blizzard

Part 7/11:

Activision Blizzard is a leading name in the gaming world, with a noteworthy 2020 financial performance driven largely by its "Call of Duty" franchise. The company reported $8 billion in revenue, marking a 25% increase year-over-year. Activision's shift towards a free-to-play model allows for continuous updates and a recurring revenue stream, making it well-positioned for sustained growth. The performance of its subsidiaries, including King Entertainment with "Candy Crush" and Blizzard with "World of Warcraft," contributes to its impressive profitability—over 35% operating margin—indicating a solid investment.

### 2. Nintendo

Part 8/11:

With over 50 years in the gaming industry, Nintendo is an established player known for iconic franchises like Mario, Donkey Kong, and Pokémon. Their success with the Nintendo Switch, a hybrid console, has solidified their position in the market. With operating profits reaching $6 billion in the 2021 fiscal year—an 86% increase from the previous year—Nintendo's profitability outlook is bright. Its market cap being only nine times its operating profits makes it an attractive investment, especially with upcoming console releases.

### 3. Take-Two Interactive

Part 9/11:

Take-Two Interactive has captured significant attention thanks to franchises like "Grand Theft Auto" and "Red Dead Redemption." Their latest iteration of "Grand Theft Auto V" has become the highest-grossing media property of all time. The introduction of in-game purchases and ongoing online experiences enhances customer engagement and revenue opportunities. With a strong portfolio and potential growth in mobile and esports categories, Take-Two presents further prospects for investors in the gaming sector.

## Conclusion: What's Next for Netflix?

Part 10/11:

The question remains: can Netflix make a significant impact in the gaming industry? Their experimental spirit and past interactive attempts suggest they are prepared to explore this avenue, but they face considerable competition. As established players like Activision, Nintendo, and Take-Two Interactive continue to thrive, Netflix may find it challenging to gain traction.

Investors and gaming enthusiasts alike will be keenly watching how Netflix navigates this potential new terrain. In the meantime, companies like Activision, Nintendo, and Take-Two represent more secure and focused investments within the vibrant gaming industry.

Part 11/11:

If you have thoughts on Netflix's gaming aspirations or would like to discuss other topics, feel free to leave a comment below. Don't forget to subscribe for more insights and updates on the entertainment and tech industries!