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Netflix's (NFLX) Expanding Games Portfolio Aids Prospects

Netflix NFLX is expanding its portfolio with the upcoming launch of several games, including The Queen’s Gambit Chess, Oxenfree II: Lost Signals, Cut the Rope Daily, Paper Trail, and LEGO Legacy: Heroes Unboxed.

The company’s focus on expanding its mobile games portfolio is deepening with the current offering of 60 games and more than 40 new games slated to be released this year.

The streaming giant is pushing hard to keep subscribers glued to the platform amid tough competition from the likes of Disney DIS, Comcast CMCSA and Apple AAPL. Games developed on Netflix’s own IPs have been a prudent way to keep subscribers engaged.

Among the upcoming games, The Queen’s Gambit Chess is based on the hit Netflix limited series while Oxenfree II: Lost Signals is the company’s first game developed in-house.

Netflix has been taking the route of acquisitions to expand its footprint in the gaming industry. Since launching the game initiative in November 2021, the company has acquired several studios, including Finland’s Next Games, Texas-based developer Boss Fight Entertainment, and Night School Studio, the developer best known for its supernatural mystery adventure, Oxenfree.

Netflix, Inc. Price and Consensus


Netflix, Inc. price-consensus-chart | Netflix, Inc. Quote


Netflix’s Strong Portfolio Steers Away Stiff Competition

Netflix gained 1.75 million paid subscribers globally in the first quarter of 2023. It lost 0.2 million paid subscribers in the year-ago quarter.

At the end of the first quarter, the company had 232.5 million paid subscribers globally, up 4.9% year over year.

Netflix shares have gained 38.8% year to date against the Zacks Consumer Discretionary sector’s gain of 8.5%. NFLX shares have also outperformed Apple, Comcast, and Disney. Shares of Apple, Comcast, and Disney have returned 38.7%, 12.8% and 32%, respectively.

Netflix is benefiting from a diversified content portfolio, cheaper ad-supported plans and a password-sharing initiative. Hit shows like The Night Agent, The Glory, Full Swing, and That 90s Show helped the company win subscribers in the first quarter of 2023.

Netflix’s ad-supported cheaper plans are gaining user attention. The company launched its ad-supported service on Nov 3, 2022, with the basic plan costing $6.99 a month in the United States.

Disney followed in the footsteps of Netflix to offer its ad-supported tier starting Dec 8, 2022. Its streaming service, Disney+, as of Apr 1, 2023, had 157.8 million paid subscribers compared with 161.8 million as of Dec 31, 2022.

Netflix recently announced its paid sharing model in the United States, alerting members that their accounts cannot be shared for free with users outside their households. The company already launched the paid sharing model in Canada, New Zealand, Spain and Portugal in first-quarter 2023.

Netflix’s strong content portfolio and an expanding game portfolio are expected to help it win subscribers despite the negative impacts of password sharing in the near term. This Zacks Rank #3 (Hold) company currently expects second-quarter 2023 earnings of $2.84 per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for second-quarter 2023 earnings is pegged at $2.79 per share, down by a penny in the past 30 days.

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