Netflix (NFLX) recently announced it's moving into the gaming sector with the hire of a 30-year gaming industry veteran, former EA (EA) and Oculus executive Mike Verdu. However, some experts believe that the move into the cutthroat gaming industry won't pan out for the content platform.
“This thing is dead on arrival. It will not work,” Michael Pachter, senior analyst at Wedbush, told Yahoo Finance Live. “Have me back and we'll talk about Mike Verdu’s departure and the exit of Netflix in the gaming business.”
Pachter joined Yahoo Finance Live to discuss Netflix’s content strategy in light of this announcement as well as what it means for the broader gaming industry. The push into gaming serves as another indicator that the company may be looking to broaden its avenues for revenue. The news comes after Netflix’s announcement just last week that it hired N'Jeri Eaton, former head of content for Apple Podcasts, to head its own podcast operations.
In any case, Pachter said that Netflix’s decision to hire Verdu specifically for the role in leading its gaming startup initiative may not have been the best choice.
“He keeps changing jobs. He is a good game maker, but his last good game was [in] 2001 or so, so I'm really surprised they picked him,” Pachter said. “He's just not the right guy to head up a startup initiative at Netflix. Disney (DIS) has failed at it three times. None of the major companies other than Warner Bros. have had successful games.”
Implications for the gaming industry
Although the details surrounding what gaming through Netflix will look like have yet to be released, Pachter is skeptical of Netflix’s ability to break into the market and deliver a cohesive product. According to him, there may be a scenario in which Netflix offers a separate remote for purchase in order to play games through the platform, which will make for an incremental purchase for consumers.
“I really find it odd that Netflix thinks this is going to work,” he added. “What's particularly confusing to me — what are they going to offer? Streaming on your TV? Please tell me how you're going to control the game because your remote control is very limited. You're not going to be able to aim or shoot or anything like that.”
Pachter believes that because the Netflix initiative will be “such an abstract failure,” it will not pose any threat to established competitors in the gaming space. He pointed to Microsoft (MSFT) with Xbox’s Game Pass as being one of only a few successful subscription-based game services currently on the market, and compared Netflix’s overconfidence to that of Facebook's (FB) when it acquired Oculus.
As for what he thinks Netflix may be trying to accomplish in the long term with the push to offer podcasts and video games, Pachter said that it is to become a “comprehensive entertainment solution.” However, he feels that the podcast route makes far more sense for Netflix than dipping their toes into the uncertainty of the video game space.
“[Netflix subscribers] don't need Netflix to facilitate their exposure to games, so the only value Netflix has is if they [leverage] their own IP [such as] ‘Stranger Things’ or ‘Bridgerton,” Pachter said. “I don't think ‘Bridgerton’ can be a game. It will be hot, but it won't be fun.”
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter: @thomashumTV
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