Will Electronic Arts become gaming’s Netflix?
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Will Electronic Arts become gaming’s Netflix?

Electronic Arts is one of the world’s most iconic video game companies, and it could be about to transform the industry. According to a Wall Street analyst, who gave the stock a big price-target hike last week, the company’s new approach to game streaming could turn it into a “Netflix for video games”. Given the incredible success that Netflix has had over the past few years (its share price has already appreciated by more than 100% year to date), that’s an appealing thought for investors.

Electronic Arts’ share price has appreciated by 34% so far this year

graph 2806 netflix

SOURCE: Yahoo Finance

Needham analyst Laura Martin sees Netflix capitalising on the shift to “games as a service” – a delivery system analogous to streaming in the video world, where customers pay a subscription to have access to a library of content. This, according to Martin, is the business model of the future, as far as entertainment is concerned. In a report to clients, she made the following comment:

"It is our view that millennials want to rent content (e.g. Spotify, Pandora, Netflix, Hulu) rather than own it, and that content companies with data about what their consumers view/play/use create valuation upside from programming, e-commerce, and advertising revenue streams."

Here, Martin is reiterating a view that Dominion has held for a considerable length of time. Electronic Arts has long been a t the forefront of the trend towards digital downloads and subscription options for content. This year, it pushed even further into this space, with the debut of Origin Access Premier – a subscription service that will let gamers access more than 100 of its titles for $14.99 / month or $99.99 / year.

Martin said: “we believe that EA is building a Netflix for video games.” That’s a market-leading proposition from a company that has a proven track record.


Dominion holds Electronic Arts in its Global Trends Ecommerce Fund.

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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.