LONDON: Wall Street analysts welcomed Netflix's planned plunge into mobile gaming on Wednesday, calling it a sensible move to keep users' eyes on screens while worrying it would take significant time and investment to pay off.
Announcing the move with this week's quarterly results, the video streaming pioneer offered little detail about the investment its plans would require, but product boss Greg Peters said it would be a “multi-year” effort that would start “relatively small”.
Analysts said that to be successful the move, which aims to tap new users and prop up interest among its existing audience, would need multi-million-dollar spending at a time when it is already pouring billions into original films and TV serials.
Paolo Pescatore, an analyst at research firm PP Foresight said the venture would be “a costly bold move” for the company, requiring significant time and investment with no guarantee of success.
“Making games for free will drive users, but it is not sustainable long term as a business model,” he added.
The gaming plans come as Netflix faces slowing growth in new subscribers after a record surge at the height of the COVID-19 pandemic last year. It disappointed markets on Tuesday with an anemic set of subscriber forecasts.
The company gave no timeline on the launch of its first games, saying only they would be available to subscribers at no extra charge.
“A foray into the world of gaming might simply sound like a nice idea, but it’s an important next step in Netflix’s efforts to keep our eyes on its screens,” said Hargreaves Lansdown analyst Sophie Lund-Yates.
“Netflix’s engine drivers need some grease.”
Forrester analyst Will McKeon-White likened the investment required in the gaming project to Apple's $500 million launch of its Apple Arcade videogame subscription service in 2019.
“If Netflix wants to be directly competitive with Apple Arcade, this investment should be the template for them to follow/minimum,” McKeon-White said.
Netflix spent almost $12 billion dollars on content last year and plans to up that to $17 billion in 2021 as it strives to fend off competition from Disney, HBO and others.
It has hired former Facebook executive Mike Verdu — a veteran of videogame pioneer Atari and FIFA and Battlefield publisher Electronic Arts — as its head of gaming.
The global gaming market was worth an estimated $72 billion in sales last year, although much of that goes to blockbuster franchises like Call of Duty or social gaming platforms Minecraft, Fortnite and Roblox.
“I don't see games becoming the next revenue stream to turbo-charge Netflix's growth,” said Investing.com senior analyst Jesse Cohen. “It will need to explore other potential sources such as live sports broadcasting and advertising.”
Netflix's gaming foray will cost time and money: Wall Street
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Netflix's gaming foray will cost time and money: Wall Street
- Netflix's move to the video game industry is sensible but would take significant time and investment, wall street analysts revealed
- The gaming plans come as Netflix faces slowing growth in new subscribers after a record surge at the height of the COVID-19 pandemic
UK, France mull social media bans for youth as debate rages
- Countries including France and Britain are considering following Australia’s lead by banning children and some teenagers from using social media
PARIS: Countries including France and Britain are considering following Australia’s lead by banning children and some teenagers from using social media, but experts are still locked in a debate over the effectiveness of the move.
Supporters of a ban warn that action needs to be taken to tackle deteriorating mental health among young people, but others say the evidence is inconclusive and want a more nuanced approach.
Australia last month became the first nation to prohibit people under-16s from using immensely popular and profitable social media platforms such as Instagram, Facebook, Tiktok and YouTube.
France is currently debating bills for a similar ban for under-15s, including one championed by President Emmanuel Macron.
The Guardian reported last week that Jonathan Haidt, an American psychologist and supporter of the Australian ban, had been asked to speak to UK government officials.
Haidt argued in his bestselling 2024 book “The Anxious Generation” that too much time looking at screens — particularly social media — was rewiring children’s brains and “causing an epidemic of mental illness.”
While influential among politicians, the book has proven controversial in academic circles.
Canadian psychologist Candice Odgers wrote in a review of the book that the “scary story” Haidt was telling was “not supported by science.”
One of the main areas of disagreement has been determining exactly how much effect using social media has on young people’s mental health.
Michael Noetel, a researcher at the University of Queensland in Australia, told AFP that “small effects across billions of users add up.”
There is “plenty of evidence” that social media does harm to teens, he said, adding that some were demanding an unrealistic level of proof.
“My read is that Haidt is more right than his harshest critics admit, and less right than his book implies,” Noetel said.
Given the potential benefit of a ban, he considered it “a bet worth making.”
After reviewing the evidence, France’s public health watchdog ANSES ruled last week that social media had numerous detrimental effects for adolescents — particularly girls — while not being the sole reason for their declining mental health.
Everything in moderation?
Noetel led research published in Psychological Bulletin last year that reviewed more than 100 studies worldwide on the links between screens and the psychological and emotional problems suffered by children and adolescents.
The findings suggested a vicious cycle.
Excessive screen time — particularly using social media and playing video games — was associated with problems. This distress then drove youngsters to look at their screens even more.
However, other researchers are wary of a blanket ban.
Ben Singh from the University of Adelaide tracked more than 100,000 young Australians over three years for a study published in JAMA Pediatrics.
The study found that the young people with the worst wellbeing were those who used social media heavily — more than two hours a day — or not at all. It was teens who used social networks moderately that fared the best.
“The findings suggest that both excessive restriction and excessive use can be problematic,” Singh told AFP.
Again, girls suffered the most from excessive use. Being entirely deprived of social media was found to be most detrimental for boys in their later teens.
’Appallingly toxic’
French psychiatrist Serge Tisseron is among those who have long warned about the huge threat that screens pose to health.
“Social media is appallingly toxic,” he told AFP.
But he feared a ban would easily be overcome by tech-savvy teens, at the same time absolving parents of responsibility.
“In recent years, the debate has become extremely polarized between an outright ban or nothing at all,” he said, calling for regulation that walks a finer line.
Another option could be to wait and see how the Australian experiment pans out.
“Within a year, we should know much more about how effective the Australian social media ban has been and whether it led to any unintended consequences,” Cambridge University researcher Amy Orben said.
Last week, Australia’s online safety watchdog said that tech companies have already blocked 4.7 million accounts for under 16s.
