Zacks Equity Research
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Netflix NFLX offers games to keep its audience engaged. The streaming giant serves more than 300 million paid households, offering ample engagement opportunities through its “no-cost” gaming titles.
Netflix focuses on offering immersive narrative games based on its content, with the most recent example being the launch of Squid Game: Unleashed, which came alongside the release of Squid Game Season 3. Even non-members can play the game — a strategic move to attract new users to Netflix’s platform.
The company is focusing on mainstream titles like Grand Theft Auto and expanding into kids’ games with the launch of the Peppa Pig game. Moreover, socially engaging party games represent a category that Netflix plans to penetrate over the long term.
Netflix plans to invest in game development, but in a measured way. Over the long term, the company expects games to generate roughly $140 billion in consumer spending, excluding ad revenues.
Increasing engagement trends driven by a more diverse entertainment offering and a strong games portfolio bodes well for Netflix’s prospects. For the second quarter of 2025, NFLX forecasts revenues to increase 15.4% (+17% F/X neutral) to $11.035 billion. Netflix continues to forecast 2025 revenues of $43.5-$44.5 billion, which assumes healthy member growth, higher subscription pricing and a rough doubling of ad revenues.
Netflix faces stiff competition from players like Take-Two Interactive TTWO and Electronic Arts EA.
Take Two Interactive benefits from a solid portfolio that includes NBA 2K25/2K24, Grand Theft Auto Online, Toon Blast, Empires & Puzzles, Red Dead Redemption 2 and Words With Friends. Take-Two Interactive’s future release slate holds significant growth potential. The announced lineup includes major titles spanning multiple genres. The titles include Mafia: The Old Country, Borderlands 4, NBA 2K26, WWE 2K26, CSR 3, Civilization VII for Switch, and the immensely anticipated Grand Theft Auto VI, scheduled for May 2026.
Electronic Arts expects continued growth in live services, as well as the launch of new non-annual titles in fiscal 2027. Its popularity is primarily driven by its well-known franchises, which will continue to fuel the top line. EA SPORTS titles, along with Madden NFL, The Sims and Apex Legends, are some of its biggest franchises. Electronic Arts is positioned for strong growth with two major franchise launches in fiscal year 2026 — Battlefield and Skate.
NFLX shares have appreciated 45.7% year to date, outperforming both – Zacks Consumer Discretionary sector’s return of 11.8%, as well as the Zacks Broadcast Radio and Television industry’s 37.7%.
