In the wake of Grand Theft Auto Trilogy’s success on its platform, Netflix Inc. NFLX seems to be considering an expansion into popular gaming titles.
What Happened: During the fourth quarter earnings call, the streaming giant's co-CEO Greg Peters revealed that mainstream gaming titles like Grand Theft Auto Trilogy significantly expanded Netflix’s gaming portfolio last year.
According to Peters, the performance of Grand Theft Auto Trilogy has not just met but surpassed their high expectations. It even recorded the highest download and engagement numbers, outperforming mobile game downloads for several weeks.
The co-CEO went on to say that Netflix has seen a threefold increase in game engagement over the past year, a trend he attributes to a massive $140 billion consumer spend opportunity.
"We were in the top mobile game downloads for several weeks, which shows it was not only big for us, but big numbers for mobile gaming in general. And beyond any specific title, we’ve tripled game engagement over the last year. So that’s a solid growth trajectory for us," he stated, adding, "Games, it’s a huge opportunity, $140 billion in consumer spending, ex-China, and Russia. And we believe we can build games as strong components and another content category to deliver entertainment value to our subscribers."
The company’s current game investment, although only a fraction of its total content budget, is set to continue as Netflix aims to translate these investments into member value.
Peters also touched upon the potential of licensing existing games. When asked if the company intends to reconsider focusing on games available exclusively on the service and "emulate the success" of GTA by offering games like Candy Crush or Fortnite, he responded saying, "Yes."
"Licensing games, existing games with often with some form of exclusivity, that’s been a key part of our strategy, and it’s going to continue to be so," Peters said.
He added, "We’re going to look for more great licensing and some exclusive licensing, so we can do things more like what you’ve seen us do last quarter with GTA, but also other titles like Football Manager 2024, which performed very well for us. Money Heist or La Casa de Papel, which was great. You’ll see it this quarter with titles like Virgin River, so that’s definitely the strategy that we’re on, and you’ll see us do more of that work."
Why It Matters: During the call, the company representatives also spoke about a crackdown on password sharing, which led to increased engagement and new user sign-ups. Despite causing a minor decrease in engagement due to paid sharing, this move drove new users to create their accounts.
Besides gaming, Netflix has also ventured into sports entertainment.
The streaming giant’s co-CEO, Ted Sarandos, explained during the earnings call why they chose a partnership with World Wrestling Entertainment or WWE over NBA or UFC, saying WWE’s “sports entertainment” aligns closely with Netflix’s core of “sports storytelling.”
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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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