*The following is excerpted from an online article posted on MediaPost.
Netflix announced that it’s hired a Facebook executive to lead games development — apparently signaling its intention to leap into publishing video games.
The news that the world’s largest streaming power is focusing on games for its first content production foray beyond films and TV shows is already making waves in the gaming world.
GameStop Corp shares dipped 6% and shares of other gaming players declined by smaller margins in premarket trading on Thursday, as Netflix shares rose 2.4%.
The executive picked to be Netflix’s vice president of game development, Mike Verdu, has most recently served as vice president of Facebook Inc.’s Reality Labs, overseeing Oculus Studios and teams bringing games and other content to Oculus virtual-reality headsets.
Specifics are scarce at this stage, but Bloomberg sources report that Netflix is planning to build out its gaming team in the coming months, and has begun recruiting to fill game-development positions via ads on its website, with the goal of offering video games on its streaming platform within the next year.
Netflix plans to offer the games as a new programming genre on the streaming service, alongside existing content — and currently does not plan to charge additional fees for the games, those sources said.
Video games should help Netflix compete for new subscribers and retain existing ones amid the expanded array of major streaming services — some of which, unlike Netflix, offer access to live sports. They could also serve to help cross-promote Netflix’s original streaming content, and perhaps eventually allow the company to increase its service fees while minimizing subscriber losses.
“This feels like a significant event with broad ramifications across the video games landscape,” Citigroup analyst Thomas A. Singlehurst wrote in a note cited by MarketWatch.
Netflix’s entry is likely to accelerate video games’ transition to cloud-based platforms, which could trigger a “shift in the monetization model for the traditional PC/console side of the market,” he wrote.