Horizons Newsletter – week 34 // 2021
Horizons is a bi-monthly Dasym Research initiative to show you how the Dasym themes have been in the news. We publish the Horizons on our website and as an email newsletter. If you wish to receive the email, please contact Investor Relations.
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Netflix announces gaming strategy
Last month, Netflix announced it is moving into the gaming market. With previous (unsuccessful) attempts by Google, Amazon and Facebook, Netflix isn’t the first company trying to enter the $176 billion gaming industry. Why would Netflix succeed? One advantage that Netflix has is content that could be turned into a game. The company has already been experimenting with interactive content (e.g. Bandersnatch). Moreover, contrary to previous initiatives (e.g. Google Stadia and Amazon), Netflix promised not to raise its subscription fees, assuring subscribers can easily and freely access new gaming content. Besides, instead of making money directly from its gaming content, Netflix’s gaming aspirations may be motivated by two drivers of its success: data and intellectual property. Integrating games into its product line could provide Netflix better understanding of its subscribers and strengthen the IP of its titles. Finally, Netflix will focus on mobile games, which account for about half of global gaming market revenue. As a result, Netflix will not directly compete for a share of the competitive traditional console market. All taken together, Netflix’s gaming experiments will be worth keeping an eye on.
In this section we share content that may be of interest to you:
- In the last Horizons, we discussed the rise of India as a digital superpower. This McKinsey chart indicates Indian companies should consider private equity buyers, as they could unlock substantial value by selling businesses.
- Football superstar Lionel Messi will be partly paid in cryptocurrencies by his new club PSG. The deal can be placed in a wider trend of fan tokens playing a more prominent role at sports clubs at the highest level.
- Facebook and Google are planning a new subsea cable to connect Japan with south-east Asia. Subsea cables have become a geopolitical issue for tech companies, due to tensions between the U.S. and China.
China’s crackdown on tech companies
After overhauling the online education market and fining companies such as Didi, Alibaba and Tencent for violating market concentration rules, on August 11, China unveiled a five-year plan outlining tighter regulations for vast parts of its economy. The plan states authorities will “actively” work on legislation, while law enforcement will be strengthened in areas including national security, technology and monopolies. Meanwhile, investors are seeking to make sense of China’s crackdown on tech companies and its plans to tighten restrictions on overseas listings of Chinese companies. From a Western perspective, it seems a sign of an authoritarian state imposing its will on the market economy. From a historic perspective, however, China’s interference fits the model of “political capitalism”, in which the interest of the state will prevail over the interest of the market. In China’s case, it means the state will redirect the private sector to produce innovation that is more relevant to the good life, create sustainable growth and foster social stability. As such, China’s political capitalism may inspire other societies to compel tech companies to contribute to a better life also.