Netflix (NASDAQ:NFLX) is broadening its footprint in the gaming industry by extending its cloud gaming service beta test to the United States, building on initial trials in Canada and the U.K., marking an expansion of Netflix’s mobile gaming endeavors that commenced in 2021.

The company has been actively acquiring gaming studios and securing licenses for titles from independent developers, with the aim of making gaming a significant component of its business.

Netflix’s cloud gaming service allows its members to play games on smart TVs and TV-connected devices, including Amazon Fire TV Streaming Media Players, Chromecast, LG TVs, Nvidia Shield, Roku devices, Samsung Smart TVs, and Walmart ONN. The company intends to add support for additional devices in the future.

Players can employ their mobile phones as controllers, and Netflix offers a dedicated app for iPhone users to use as a game controller, facilitating gameplay on TVs. Games can also be played on Macs and PCs using a keyboard and mouse.

As it expands testing within the United States, Netflix plans to refine its game-streaming technology and enhance the user experience during the trials.

Netflix’s Approach to Boost Subscriber Growth Through Gaming

Netflix’s approach to gaming differs from traditional gaming consoles; it does not position itself as a console replacement but as an enhancement to its existing streaming service.

Netflix now anticipates an acceleration in revenue growth in the second half of 2023, driven by the launch of the paid sharing initiative and an expanding content offering.

For the third quarter of 2023, Netflix forecasts earnings of $3.52 per share, reflecting an almost 10% increase compared to the figure reported in the year-ago quarter. Total revenues are projected to be $8.52 billion, indicating a 7% year-over-year growth on a forex-neutral basis.

Netflix has been consistently expanding its games library and offerings as a means to provide more value to its subscribers. The games portfolio now includes around 70 titles.

The company offers its games as part of a Netflix subscription, with many titles based on its popular shows such as Squid Game, Wednesday, Black Mirror, and more. It has also discussed plans to license games, including Grand Theft Auto from Take-Two Interactive.

In the previous month, Netflix launched four new games, including Netflix Stories: Love is Blind, Storyteller, Ghost Detective, and Vikings Valhalla.

This company has actively acquired gaming studios and established its internal game studios to bolster its gaming business, including notable acquisitions like Boss Fight Entertainment, Night School Studio, and Next Games.

Netflix’s cloud gaming service competes with other cloud gaming services like Microsoft’s Xbox Cloud Gaming, Nvidia GeForce Now, PlayStation Plus, and Amazon Luna.

Netflix Shares and Competition

Netflix’s shares have delivered a return of 20.6% year to date, outpacing the 3% increase in the Consumer Discretionary sector. This outperformance is attributable to the company’s expanding subscriber base and robust content offerings.

Netflix is leveraging games to keep users engaged on its platform, particularly in the face of intensified competition from industry giants like Disney, Amazon, and Apple. Disney’s shares have declined 2.9% year to date, while Amazon and Apple have returned 54.5% and 37.7%, respectively, year to date.

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