Netflix isn't going to offer video games rentals after all

Back when Netflix had the crazy idea to split itself into two businesses, online streaming and physical DVD rental, the company also hinted that they would like to get into the video game rental space. When the split was called off, the fate of video game rentals was never discussed by the company. Netflix is now talking about video game rentals but it isn’t a positive conversation.

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During an earnings call yesterday, Netflix CEO Reed Hastings said the company has “no plans to enter video games.” Back in September when the idea of splitting the company was announced and DVDs were to be rented under the Qwikster name, the promise was that physical rentals would also be extended into the video game space.

Qwikster was quickly eliminated just a few short weeks later after customers and share holders made it very clear what they thought of the idea. When the announcement was made that the company would not be split up, Netflix said it was still considering offering video game rentals.

Hastings hasn’t spoken as to why Netflix has decided to kill off the idea of video game rentals. One reason might be higher prices for games as compared to DVDs. Even if Netflix could strike deals with video game publishers, games still retail for $60 when they are brand new compared to the $20 to $30 for a DVD or Blu-ray.

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The earnings call did yield better than expected fourth-quarter numbers, which is good for Netflix considering the downward trend the company has been experiencing lately. The company reported $876 million in revenue during that quarter with an overall profit of $40.7 million.

One would imagine Netflix is more interested in continuing to post gains instead of incurring more expenses by adding games to their repertoire. This does beg the question if not Netflix, who is going to come in and compete with GameFly?

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