What Netflix's Gaming Expansion Means for Its Business

Netflix (NFLX -3.92%) recently partnered up with the popular Exploding Kittens game, one of several ways the company is expanding its gaming business. In this Motley Fool Live segment from "The Gaming Show," recorded on April 25, Fool.com contributor Jose Najarro takes a look at the future of gaming at Netflix. 

Jose Najarro: Netflix, as we all know, reported earnings last week and not the greatest results. But there were some kind of hidden stuff for their gaming department. Right now, first, I want to say Netflix gaming direction. It's not your typical gaming company story. Where I feel like most gaming companies are kind of focusing on building some form AAA games, some crazy, crazy game. It seems like Netflix is going a different direction and I really do enjoy the direction that they're going. Recently, they partnered up with Exploding Kittens. I'm not sure if you guys have played the kind of card game, it's a card game. I played a lot during kind of COVID when board games came back to being cool, as I guess people were not going out as often and they just wanted to find activities in house. But Exploding Kittens, this is pretty cool card game. Netflix partnered up that they're promise promising to bring some form of mobile game to it as well as an animated series. I think this is how they're going to continue to do. They're going to focus on either IPs that they have, or strong partnerships like this to kind of integrate gaming to some form of series.

They haven't really released much about this kind of Exploding Kittens mobile game, but I do hope that the game is going to be something like a board game or a board game style where you're able to play maybe with other Netflix users as opposed to being like a single player game. I think kind of having that engagement of multi player game, it's going to just increase their gaming solutions. They did mention in their earnings call that they are building capacity faster than filming than film. when they were originally kind of focusing on film, and this is through numerous acquisitions. I believe this quarter, they mentioned they used about $150 million in cash for a few acquisitions in the gaming and visual markets. Now they're saying that they're focusing mainly on kind of creating these new games and they will also kind of continue to focus on development capacity. I'm guessing this says that, hey, we're still opening to buying more small gaming studios throughout the kind of quarter to kind of increase their overall gaming solutions. They also say this is still in early innings for Netflix gaming, but it is a top level priority for them.

I do want to say, I think Netflix should focus more on games for families, as opposec to kind of like these single player games. I always give this example, I think imagine playing like a Family Feud game with your family versus another family. I think things like that is what will drive engagement to the platform opposed to some random AAA game that they're trying to somehow make. So I think if Exploding Kittens goes well, it can kind of be that kind of Family Feud board game style that could do well for the business.