Gaming Service…From Netflix?
Netflix (NASDAQ: NFLX) is an entertainment streaming platform that has hundreds of millions of members who are actively using their subscription-based service.
For a while, Netflix has remained the backbone of streaming, however other opportunities were waiting to present themself. Recently, Netflix announced an expansion into video games with no extra cost to current subscription users. This would make a whole other avenue of growth for the platform, potentially accelerating growth even further. So what does this mean for Netflix?
Gaming services and platforms are found in many multi-trillion-dollar companies’ portfolios such as Microsoft with Xbox, Facebook with Oculus, and Google with Stadia. This is an obvious clue that gaming services perform extremely well, hence why they wanted to gain exposure.
Netflix believes they can improve their streaming platform even further with the addition of video game entertainment. This would only be available to mobile users at first and will begin rollout sometime next year. Netflix is on a variety of devices already that have higher specifications compared to a mobile device, which may enable some more graphic-intensive gaming products which could be used on PCs and gaming consoles. All of this is really up to speculation at this point.
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Although it’s currently unsure what games will be available on the platform, we do know it’ll be ad-free, at no additional cost, and Netflix tampered with the idea to make show-themed games from their existing franchises. They will most likely add or remove games based on their popularity or interest to declutter their gaming platform.
So what growth may be coming to Netflix soon and is it sustainable?
Potential Growth
Because of this gaming industry growth, we may see Netflix begin to make a massive gaming platform with a library of titles, creating an immersive streaming ecosystem of seemly endless potential. This could be an entirely new platform for gaming companies to publish new titles on.
This may also give Netflix a potential competitive advantage over other streaming services, which may influence some users of others services to switch over to Netflix or add them into their bundle of services.
Growth for the gaming industry is going to be steady over the next few years. Global Games Market revenues this year are estimated to be $175.8 billion and be on track to surpass $200 billion in 2023 according to Newzoo, a game market insights corporation.
Netflix could even partner with gaming corporations to make Netflix exclusive games which will drive excessive growth to their platform. This is going to push the streaming platform into an entirely new phase full of opportunities, possibly allowing long-term sustainable business partnerships so that each company can grow and expand its gaming products and services through the Netflix platform.
This could lead to a rally in the share price sometime soon if the potential is recognized with Netflix’s new plan.
The Outlook
Netflix is pushing to obtain its piece of the gaming market and this should excite investors. It’ll broaden their obtainable market position and allow for further growth later on down the road. Other subscription models could be introduced to adapt to their new gaming environment if it fits well.
Over the long term, Netflix may be able to establish itself as a streaming and gaming platform service. We may also see other streaming platforms begin to compete. For example, Disney+ might want to introduce Disney-themed games onto their platform to exercise their market position. This isn’t confirmed of course, but it’s a possible action they could take along with many others.
Overall, this move should be seen as a massive positive, not only for platform growth but also as a brand. It’ll be an exciting time for Netflix shareholders as they broaden their outlook over the next few years and possibly see accelerated growth push them into a new era of streaming capabilities.
Closing Thoughts
Netflix is a behemoth in its industry, now diversifying its presence into another industry which if positioned correctly the company can quickly excel. A long term investor may want to look at LEAP options to gain potential exposure to this market with relatively low risk. With LEAPS you get the control over 100 shares per single contract without the large outlay of capital.
You can participate in the potential upside growth of a stock while putting a cap on your downside risk to only the premium paid to enter the trade which is a fraction of the cost of full ownership of 100 shares. LEAP option strategies have a variety of different uses and benefits and should be part of of every long term trader’s tool box.
This is not intended to be investment advice. As always do your own due diligence and invest based upon your own risk appetite and consult your own financial advisor for the right investment strategy for your specific needs.
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