Netflix's Video-Gaming Foray Could Put It At Odds With Apple

Netflix Inc.’s NFLX much-anticipated foray into videogames likely puts the streaming giant on a collision course with tech giant Apple Inc. AAPL.

What Happened: Netflix said Tuesday it will offer video games in its existing subscription plans at no additional cost and will initially focus on games for mobile devices.

Netflix had identified the video game “Fortnite” as one of its biggest rivals way back in 2019.

“We compete with (and lose to) Fortnite more than HBO,” the company said in a letter to shareholders that year.

Confrontation with Apple: Nevertheless, Netflix’s expansion into video games could put the company in direct competition with Apple’s gaming subscription service, Apple Arcade. The service is included as part of the “Apple One” subscription or for a monthly fee of $4.99.

Netflix would also require approval from Apple to stream games in the iOS app. Apple requires services that stream games to release each game separately for individual listing and review on the App Store.

The company’s App Store policies have resulted in cloud gaming platforms of multiple companies being denied entry into the App Store. Apple has prevented Microsoft Inc.’s MSFT game streaming service xCloud, Alphabet Inc. GOOG, GOOGL subsidiary Google’s Stadia, and other gaming platforms from entering the App Store.

Epic Games lawsuit: “Fortnite” game developer Epic Games Inc. filed a lawsuit against Apple last year after the game was removed from the App Store as Epic Games tried to bypass a 30% cut charged on in-game purchases. Apple has rejected third-party payment tools for in-app purchases. Microsoft has sided with Epic Games in the lawsuit.

It was reported on Wednesday that several analysts are cautious about Netflix’s push into video games.

Price Action: Netflix shares closed almost 3.3% lower in Wednesday’s trading at $513.63, while Apple shares closed 0.5% lower at $145.40.

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