Netflix has dived into the gaming market after agreeing to buy video games maker Night School Studio and rolling out five mobile gaming titles in select European markets, including Spain and Italy.
The acquisition is the streaming TV giants’ first as it looks to original and licenced games that can be rolled out across its streaming service.
The company sees gaming as a way to push beyond its core TV and film markets and diversify revenue sources amid intensifying competition in the streaming space from the likes of Apple TV, Amazon Prime, Disney+, HBO Max as well as more localised services, such as the BBC/ITV joint venture Britbox in the UK.
‘Their commitment to artistic excellence and proven track record make them invaluable partners as we build out the creative capabilities and library of Netflix games together,’ said Netflix about Night School Studio in a statement.
ESTABLISHED GAMER
Night School Studio games are already available on major gaming devices, such Sony’s PlayStation, Microsoft’s Xbox and Nintendo’s Switch, as well as on PCs.
Netflix had mentioned its plans to enter gaming during its last quarterly earnings update in July. ‘Like our shows and films, these games will all be included as part of your Netflix membership, with no ads and no in-app purchases,’ the company said.
Netflix has not revealed the price it will be paying for Night School Studio.
VOLATILE STOCK
Netflix stock has fallen from $605 to $583.85 at the close overnight, including a 1.5% decline during Tuesday’s trading.
But investors should not see this as a negative reaction to the firm’s plunge into gaming but instead it reflects a wider sell-off in the technology sector. The share price is seen rising around 1% when trading reopens in the US this afternoon, according to stock futures.
Stifel last week upped its price target for the streaming giant. The broker sees the stock reaching $680 now, up from $650 previously and 16.5% higher than the current level. That compares to the consensus price target $622, according to Refinitiv data, which also has the stock trading on a forward 12 months price to earnings multiple of 47.7.
