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Why Netflix’s push into video games doesn’t make sense

With subscriber growth hitting headwinds in 2021 after a COVID-19-led surge in 2020, Netflix recently made a splashy announcement that it was hiring a gaming executive, Oculus and EA alumnus Mike Verdu, to build up the company’s newly minted interactive division. Reports soon followed that Netflix would start offering video games on the service within a year. Details are sparse at this point, but the assumption is that Netflix will create games around popular Netflix franchises—think Stranger Things—as a way to “enhance and deepen member engagement,” as a job listing recently put it. 

The move isn’t all that surprising. There have been rumblings about Netflix looking to hire a top gaming exec within the gaming industry for a year now, and Netflix cofounder and co-CEO Reed Hastings has referenced Fortnite as one of Netflix’s biggest competitors. But it is audacious for a company that has been so disciplined about refraining from sideline businesses, instead keeping its focus on doing just one thing really well: offering movies and TV shows to stream.

That single-mindedness seems to be weakening, however, as the streaming wars rage on: Amazon Prime is now head-to-head with Netflix when it comes to subscribers, with over 200 million worldwide, and it potentially just boosted its content library with the purchase of MGM for $8.5 billion (if regulators permit it). Apple TV Plus is still playing subscriber catch up, but it’s gaining critical acclaim with shows like Ted Lasso, which just scored 20 Emmy nominations, including Outstanding Comedy Series. HBO Max and Disney Plus, meanwhile, are loading up with tentpole offerings, such as, respectively, Space Jam: A New Legacy and Black Widow, from their parent companies.

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