Netflix, Inc. (Nasdaq: NFLX ) has been one of the biggest market success stories of the past decade. According to Morgan Stanley analyst Keith Weiss, Microsoft Corporation ( MSFT ) has positioned itself to potentially become the Netflix of online gaming in the long term.

Weiss says Microsoft's gaming business has largely been ignored, undervalued and misunderstood by Wall Street, but it could prove to be a valuable earnings growth driver over the next three to five years. Weiss says investors and analysts tend to put too much focus on Microsoft's Xbox console sales.

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"However, with the gaming ecosystem expanding from the console to the PC and mobile device, a shift from hardware and one-time video game sales to subscription services and a future which includes streaming, broadcasting, and mixed-reality, we see Microsoft well positioned for the future of gaming," Weiss says.

Weiss estimates that Microsoft's gaming segment could contribute 38 cents in earnings per share by fiscal 2021, which would represent more than $11 per share in value for MSFT stock . Morgan Stanley estimates Microsoft gaming revenue will eclipse $10 billion for the first time in fiscal 2018, up about 11 percent from 2017.

As more gamers make the jump from console to PC and mobile, Weiss says Microsoft has a major opportunity to transition to a Netflix-like subscription model.

"While continuing to invest and grow the traditional console-based business, the emerging opportunity for Microsoft is building the 'Netflix of Gaming' – a subscription gaming service offering subscribers access to a broad range of gaming content, across any device they choose, for a flat subscription fee," Weiss says.

He says the first step in this transition will be to extend Game Pass from the Xbox to PCs and mobile devices. Game Pass subscribers currently pay $9.99 per month to access a library of more than 100 Xbox games.

In addition, Weiss says Microsoft's streaming service Mixer is an opportunity to allow Game Pass subscribers to enjoy both playing and spectating.

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Finally, Weiss says transitioning Game Pass from a download service to a streaming service would lower the barrier of entry for new gamers by eliminating the $400 up-front cost of a console.

Weiss says Microsoft has a strong chance of reaching a $1 trillion market cap within the next year and sees nearly 30 percent upside for the stock.

Morgan Stanley has an "overweight" rating and $130 price target for MSFT stock .

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