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Netflix made a big hire for Mike Verdu. Here’s what he says about how the company will compete in the already crowded video game streaming space.
The time of dreams
In the interactive entertainment industry, success is often more about talent than the overall budget. So when
Netflix
said on Wednesday that he had hired former
Electronic arts
and
Zynga
Mike Verdu as vice president of game development, investors would be wise to take note.
Netflix (ticker: NFLX) has been low-key on further details, and Wall Street’s reaction has been mixed, with the streaming giant’s shares falling 0.9% to $ 542.95 amid broad weakness among the names of the technology. Truist analyst Matthew Thornton summed up the reaction well in a note on Thursday: The news is a clear positive for the company, according to the strategy.
Two things seem likely. First off, Netflix chose to hire Verdu, who has a history of being involved in mobile games, so maybe the company wants games more like candy Crush than Grand Theft Auto. Second, it’s Netflix, so it’s a reasonably safe bet to expect some sort of video game streaming offering in the future.
Streaming video games, however, can be a tough business. The technical challenges revolve around reducing the delay between a player pressing a button in a game and that action happening on the screen. And there is a lot of competition working on different obstacles.
Alphabet
‘s (GOOGL) Google launched Stadia, its streaming platform, in 2019 with mixed results. Stadia struggled from the start to achieve comparable success to major video game systems produced by Nintendo (NTDOY) or
Sony
(SNE). Google appears to have rethought its vision for the service earlier this year, after the company halted in-house production of games to focus on the future of technology as a platform.
It makes sense. Stadia’s stumbles weren’t caused by weak technology, quite the opposite, as it is one of the most promising offerings in the current lineup from a technical standpoint. For example, Stadia was one of the few reliable ways to play buggy notoriously Cyberpunk 2077 when the game launched in December without a high-end and expensive video game computer. It’s also possible to run Stadia in Google’s Chrome browser on many types of devices, much of the promise of any kind of streaming gaming platform.
Microsoft
(MSFT) has been the strongest supporter of cloud gaming recently, doubling down on its strategy to make its Xbox catalog available on any device last month in a major announcement. It even announced deals with TV makers and a project to make dongles for game streaming. Powered by Microsoft’s impressive Azure infrastructure, the Redmond, WA-based company has both technical prowess and an extensive catalog of games designed for Xbox.
Another impressive participant is
Nvidia
(NVDA), one of the industry pioneers. Its GeForce Now platform has been running – in beta and as a combined full product – for about six years, which has left Nvidia with plenty of time to fix issues. GeForce Now has a great selection of PC games and, under the hood, some of Nvidia’s most advanced graphics chips, which add features like real-time ray tracing, adding graphical realism.
The list does not end there. Sony offers a cloud streaming service that runs PlayStation games with PlayStation Now. Publishing giant EA (EA) continues to view cloud streaming as a significant opportunity in the industry, a spokesperson said Thursday.
Amazon.com
(AMZN) also launched a streaming service. Called Luna, it was put online amid the Covid-19 pandemic last year – it includes a subscription for
Ubisoft Entertainment
games, and like others like Stadia, has a custom controller (will Netflix start making hardware?).
With at least six major efforts underway, the question remains whether Netflix will be successful.
Write to Max A. Cherney at max.cherney@barrons.com
