Netflix ‘should stream video games’ to reverse falling market share

Netflix «devrait diffuser des jeux vidéo» pour inverser la baisse des parts de marché

Netflix may be in trouble if it doesn’t diversify, expert says.

The past two months may have provided some long-awaited good news in the US and UK, where vaccinations are booming and businesses are reopening. However, Netflix – which has thrived in those markets after millions turned to the service during the pandemic – is now feeling the strain: Shares of the streaming giant have fallen nearly 11% this month.

The decline follows Netflix’s first-quarter shareholder letter, in which it explained that new subscriber growth had slowed significantly in the latter stages of 2020 due to a lack of new blockbuster content caused by downturns in production based on Covid-19. In the second quarter of 2021, it predicts just 1 million paid net adds, down from 10 million in the second quarter of 2020 – no surprise, as people start going back outside to try and get their gas back of pre-pandemic normality.

However, this promise of new content later in the year is not enough to increase engagement and turn the company around, according to Peter Garnry, head of equity at Saxo Bank, specialist in commerce, investment and technology. Instead, he called on Netflix to go beyond its usual mission, branching out to become a hybrid video streaming and gaming service to cater to ever-growing audiences.

In an article for Saxo, Garnry said he thinks it’s time for Netflix to get a head start and embrace gaming, first through the esports showcase on its service. , then potentially offering something to rival Apple Arcade.

Speaking on the Saxo Market Call podcast on April 21, he explained: “Netflix says it’s not competition from video streaming or ‘linear TV’ that’s the problem. They imply that gaming is taking eyes away from video streaming, and more from e-gaming streaming and gaming as a business. Where Netflix is ​​a passive type of entertainment, gaming is a much more addictive and active type of participation.

“Netflix […] recognizes gaming as an important part of entertainment.”

Garnry went on to explain that Netflix should broaden its outlook as a business, explaining that the first thing to do is to completely redefine its offering as more than on-demand video production and streaming.

He said, “If Netflix sees itself not just as a video streaming service for traditional television, but as an entertainment house, they should probably do video game streaming and […] get into production and the sale of video games.

“It would be a natural thing for them to do. They have the brand and global distribution, which can be an interesting angle for Netflix. »

While the company undoubtedly has the streaming firepower to meet those demands, the jury is still out on Apple Arcade, and Netflix’s entirely different demographics mean a move to gaming will likely focus on casual titles. . Of course, any serious commitment to game streaming can require hardware, as is the case with Google Stadia – and we all know how that goes.

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