Netflix Tips Its Hand to Gaming Strategy

Shares of Netflix are getting caught in the technology downdraft today. The stock is fractionally lower on Friday after rallying to a fresh intra-day high on Thursday. Netflix currently hovers at $606 after rising 4% for the month of September. Year-to-date, Netflix’s stock has gained nearly 16%.

Netflix has been itching to compete in gaming and in recent days announced an acquisition to show it means business.

Netflix and Gaming

Netflix has scooped up Night School Studio, a Los Angeles-based independent game developer behind titles such as Oxenfree. Night School Studio’s games can be accessed on platforms such as PlayStation, Xbox, the Switch and Steam. Netflix also expanded into mobile gaming with the addition of a handful of titles.

Netflix not only competes with other content streaming companies but also video games. CEO Reed Hastings once said that the company competes with Fortnite even more than HBO. Now Netflix has tipped its hand on its strategy and that it plans to expand through acquisition.

Night Schol Studio was not a high-profile acquisition for Netflix. Wedbush analyst Michael Pachter said on CNBC that Hastings’ company would probably need to make a multi-billion dollar gaming acquisition in order to move the meter, such as Warner Brothers Interactive Entertainment, which is likely on the block.

South Korean Complaint

While Netflix has its sights on growth, the company is also the target of a lawsuit by SK Broadband, a South Korea-based ISP. The Seoul-based company is looking for Netflix to foot the bill for higher internet traffic as a result of surging demand for the streaming company’s content.

Netflix Korea sensations including Squid Game and D.P. on Netflix have been driving the traffic. Squid Game is a survival show in which the stakes are life and death. It is on its way to becoming one of the top original shows ever on Netflix. SK Broadband estimates that Netflix’s bill for 2020 was close to $23 million.

A local Korean court recently decided it was reasonable for Netflix to pay for the traffic it is fueling at the ISP.  Netflix is fighting back with a court proceeding that is expected to occur by year-end.