As Netflix has grown to more than 207 million customers globally, it has long pointed out that its competition stretches beyond the traditional TV and movie companies that go head-to-head with it.
However, Netflix Inc.’s venture into gaming is raising more eyebrows than excitement among analysts. Though there’s long been speculation that Netflix might move into video games, The California-based company doesn’t have the infrastructure or the expertise to create or support top-tier games, analysts said. And that capability will not be easy to build.
The streaming Hercules has appointed former Electronic Arts and Facebook executive, Mike Verdu as vice president of game development, a massive step in what’s eventually an enormous effort for the company.
The company has experimented with games before through its interactive, choose-your-own-adventure-style programming like Bandersnatch and some licensing and merchandising partnerships. But in April, Netflix’s chief operating and product officer indicated that Netflix’s interest in gaming is advancing.
Videogames could be a fruitful solution. Global consumer spending on game software is expected to reach $175.8 billion this year and exceed $200 billion by 2023, according to Newzoo BV. Mobile games—the kind Netflix will focus on—are on course to make up approximately half of the year’s share.
One problem is Netflix lacks the infrastructure needed to support so-called top-tier titles with incredible graphics. Such games require low latency. Netflix could partner with a cloud provider such as Amazon.com Inc. or Google, both of which have opposing ventures into games, but that would be incredibly expensive.
Success is far from guaranteed, analysts say, as larger incumbents have at times struggled in mobile gaming, and it can be a challenge finding the right content that presents itself to becoming a videogame, like Amazon Game Studios spending $500 million annually on a ton of gaming projects since 2014, but has been unable to make any waves in gaming.