TWIG 142: Netflix Hires Facebook Gaming Executive Mike Verdu

catch full episodes of deconstructive fun podcast on spotify apple podcast anchor google podcast or wherever you get your podcast from okay so the big news of the week is that netflix hires mr mike perdue to run their gaming division so we don't know a lot of details they haven't really announced a lot but they just had an earnings call yesterday which which kind of add a little bit of color but let me just think let me just tell you what i think right so but what we do know is that mike is running like the game development part the similar to what he was doing at oculus they've netflix has been making their way into this market very slowly over the last few years they have a mobile game based on stranger things they have a console pc game that they're supposedly in in development for that some other stuff that's going on they they they and the and the big thing here is like the big strategy here is that they don't feel like they're really competing against hbo disney they're competing against you know things like fortnite

and other other entertainment mediums that are taking up people's time right and so this makes sense from a strategy perspective to get into games and so so my first take on this is by hiring someone like mike perdue it's clearly they're serious about games i am a pretty big fan of mike and i think he is very well respected in the industry although i heard saw some hate some article hate on that about him when this thing came out but whatever but mike would not like go over to netflix and leave oculus unless there was a huge opportunity that he saw down the line right it's just that's the way he i think operates in general i don't want to like divulge any type of information that i have discussed with them but and and and from my from my investors that i've talked to they basically they're very the management's very thoughtful and methodical about what they do so they have long-term plans and they execute against them but the challenges are super clear here in my view anyway and i want to be crystal clear here for the netflix lovers like mr chris heatherly right is that

if they are trying to compete against microsoft and sony and nintendo they will fail and they will fail miserably right streaming services for things like call of duty madden assassin's creed that [ __ ] won't work and i've we've gone over this a million times but and i don't even actually want to do it again i'll i'll cut this short that's not the right strategy in my opinion right because it's just it doesn't make sense right but i do think they have a bigger opportunity here to expand the interactive to a much broader audience it by by creating these interactive type experience like boulder dash or whatever frick that game was and other experiences that kind of are optimized against their own platform and so this is where i think they will succeed and why google failed right google tried to just replicate consoles and without any content or without anything differentiating them which makes no sense right but netflix has their own platform and so so again what netflix number one first netflix is very methodical in what they do and they take the long-term approach so by creating

the this group they can build up content over time and build up experience and see what works right i also spoke to mike a few months ago about oculus and frankly he seemed quite content at oculus so the fact that he left is a little bit surprising to me even though i heard the rumors ahead of time but like but if i were to speculate the only way he would actually move something like oculus to something like netflix is the fact that he sees it as a big opportunity right and that they're they're going to dedicate a lot of resources and and and money to this opportunity so that's really good news for them again they have 200 million type users which is a huge group to experiment with with different types of content to see what sticks etc which i think is awesome and they have the deepest of deepest pockets right so you know they they could basically make huge investments in different games and see what hap what works and again what we said the last time is this is really good news for employees of the industry right people like us and you know consultants etc and also a lot of the indies that don't want to make free to play games they want to make more content that that is is you know more a

broad appeal and more interactive and and more story based et cetera that doesn't really work as well on on mobile or free to play and again they could be an acquirer in the space but i honestly don't think they're going to be this is the first question that everyone asks on the on the investment side is i don't think they're going to make a big acquisition like zynga or yay i don't think that makes sense i think they make smaller acquisitions and build up teams to build out content that's specific to their platform and so after listening to their investor call this is kind of my first piece of notes they basically did not do much too much information but they basically said they're trying to expand their ip into interactive um and create new ip and they're going to small start small and build over time which is kind of what i thought they would be doing and provide explorations and deeper experiences around the ips that they've created things like stranger things etc there are no ads no in-game purchases this is part of the it's part of a free addition to their netflix service so no more free to play at all i mean so far anyway but overall i'm

super excited to see what they can accomplish right it seems very ambitious you know it's like seems aggressive but not crazy aggressive like google like who's gonna take over the world and have completely unrealistic expectations of what they could achieve and it'll be interesting to see what it what how this evolves and mike if you need any help with strategy you can always reach out this is very interesting take for eric crest because i remember when we went through this you know netflix type of stuff i i'm gonna probably misquote you but you said something along who the [ __ ] would work for netflix and then everybody else on this podcast no like okay i know i know all right so i have to i i do have to clarify i thought i clarified that the next week but my my my point then is that when people said that netflix was getting into gaming they assumed that they were competing against microsoft and sony and that's what i would say this is ridiculous the bodies are on the on the floor right now but this more methodical approach and creating content that is geared towards their audience as well as their platform

this is like and creating their own content this is gold this is what i do support that that's what makes sense to me like trying to piss in sony and microsoft's pond makes no sense right and that's not it doesn't seem what they are trying to do and i think you know we'll see what the strategy is going forward and how it evolves like for instance if they go out and acquire like take two or ubisoft in the next couple months then i'm wrong right they're going [ __ ] for broke dude they're going after it right i i don't think that's a good idea i i'll say that then that's not a good idea but i don't think that's what they're doing all right so kind of like i was i was reading through the the the quarterly reports as well and and what they were talking about is you know to some extent growth stalling for netflix they didn't have as many subscribers they were expecting and of course there's streaming wars going on with the disney's and the hbo's and the showtimes and you name it everybody has their own steam streaming platform down to even more hammer they talked actually in the quarterly quarterly they talk about that netflix

is entering merchandising like disney so what i feel like them entering gaming is also this sort of a big strategic push towards growth and that they're grown so big that they have to search for other growth avenues like gaming like merchandising now what i agree with what eric was saying is you know share for consumers time of course gaming takes a lot of the share and probably they would draw the circles and they would notice that a lot of their consumers are playing games while watching netflix you know chilling maybe candy crushing a little bit while watching downton abbey or whatever whatever is your show and i also agree that they have infinite resources to do whatever they want to do i very much like what you said you know that they're you know starting small and not going through the like the disney routes or even the nbc route of building a big publishing organization having these insane expectations and when they're unable to deliver in a very short amount of time they just kind of stop everything so what i've been always asking is like what's their model going to be like uh they are doing some licensing right

now are they going to do some work for hire are they going to move to publishing and build their publishing work are they going to go deeper into m a so those are all kind of questions and you mentioned mike purdue i've never actually met mike but i've heard only you know this doesn't mean anything but i've heard only like great things about him and uh people who work closely with him or under him all were very positive i think he worked at ea before because i know some people at en and they really liked working with him so anyways i salute netflix i i thought this was a positive news from the get-go i know we laughed when chris you were kind of negative towards netflix but i think everybody else on this podcast was very positive towards it and then i believe now we're 100 positive towards netflix moving into gaming so all power to them what do you think suffer yeah i'll talk a little bit about it in my my section but yeah i mean i i've been positive since the get-go i think it's smart i mean i think it's all encapsulated in an article that was published yesterday with the headline as domestic growth stalls netflix plots video game expansion