According to a report published by StreetInsider.com, Netflix (NFLX) has made a foray into the video game development space by acquiring California-based independent video game development company Night School Studio for an undisclosed amount.
The deal is a part of Netflix’s plan to develop video games and offer them in its subscription plans with no in-app purchases or advertisements.
Shares of the company closed 2.6% higher on Wednesday. The stock gained another 0.8% in extended trade to finally end the day at $604. (See Netflix stock chart on TipRanks)
Night School Studio said, “Night School wants to stretch our narrative and design aspirations across distinctive, original games with heart. Netflix gives film, TV, and now game makers an unprecedented canvas to create and deliver excellent entertainment to millions of people.”
The Vice-President of Game Development at Netflix, Mike Verdu, said, “We’ll continue working with developers around the world and hiring the best talent in the industry to deliver a great collection of exclusive games.”
On September 29, Benchmark Co. analyst Matthew Harrigan maintained a Sell rating on the stock but raised the price target to $493 from $448 (17.7% downside potential).
The analyst said that his “continued negative view remains specific to Netflix and is not of broad tech/growth stock valuation anxiety.”
Overall, the stock has a Moderate Buy consensus rating based on 23 Buys, 5 Holds and 3 Sells. The average Netflix price target of $627.34 implies 4.7% upside potential. Shares have gained 19.8% over the past year.
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