Netflix, the world’s biggest streaming company, is buying Finnish mobile games developer Next Games in a €65 million ($72.14m) deal that will expand the company’s reach and diversify its business beyond its core activity of streaming.
Under the terms of the agreement, it will commence a tender offer to acquire all of the issued and outstanding shares of Next Games, Netflix said on Tuesday.
“We are excited for Next Games to join Netflix as a core studio in a strategic region and key talent market, expanding our internal game studio capabilities,” Michael Verdu, vice president of games at Netflix, said.
“While we’re just getting started in games, I am confident that together with Next Games we will be able to build a portfolio of world-class games.”
Next Games, the publicly listed developer of The Walking Dead games, specialises in games based on entertainment franchises, such as movies, TV series or books.
Gaming is booming as the threat from Covid-19 recedes.
The global mobile gaming market is expected to grow at a compound annual rate of 11 per cent, to $272 billion by 2030, according to ResearchAndMarkets. The category is already bigger than the PC and console gaming markets combined, contributing about 57 per cent to the $173bn in global video games revenue last year.
Next Games shareholders will receive €2.10 per share of the gaming company, for a total equity value of approximately €65m, the statement said. The offer has been recommended by the mobile game company’s board of directors.
The transaction is expected to close in the second quarter of 2022, subject to customary closing conditions.
“Joining forces with the world’s largest streaming service, Netflix, presents an opportunity for a logical and exciting continuation of our strategy to craft interactive experiences for the world to enjoy,” Teemu Huuhtanen, chief executive of Next Games, said.
“Our close collaboration with Netflix on Stranger Things: Puzzle Tales has already proven that together we create a strong partnership. This is a unique opportunity to level up the studio on all fronts and continue on our mission together.”
“Next Games has a seasoned management team, strong track record with mobile games based on entertainment franchises and solid operational capabilities,” Mr Verdu said.
Netflix made its first foray into gaming after it acquired Night School Studio last September. The company’s push into the sector comes as its own subscriber growth slows amid increased competition.
Netflix added 18.2 million customers in 2021, down about 50 per cent from the record number it had garnered in 2020 when lockdowns around the world caused membership to soar.
The company forecasts that the slowdown will continue for another quarter or longer.
It said it has 222 million paying members in more than 190 countries.