Netflix has to do this to succeed in video games

Increasing competition in the streaming market has prompted several companies to diversify their offerings. Netflix (NFLKS 1.25%) did so by moving into gaming, launching Netflix Games in November 2021.

While Netflix is ​​taking a step in the right direction by offering value-added services, the company may have bitten off more than it can chew on its gaming service. That’s what Netflix needs to succeed in the incredibly competitive world of gaming.

Name recognition is key

Netflix announced that it lost 200,000 subscribers in the first quarter of 2022. The frustration has led to a complete reprioritization of the company, leading to content cancellations, a newly announced level of ad support, and more focus on games. The latter led to Netflix acquiring three game developers in less than a year: Boss Fight Entertainment, Night School and Next Games. The products of these studios vary considerably, from popular mobile games to well-known indie titles and additions to familiar franchises such as Walking Dead.

Netflix head of external games Lynn Lumbe told the Tribeca Film Festival on June 13 that the company is “intentionally keeping the situation under wraps.” [about Netflix Games] because we are still learning and experimenting.” Lumbe added that Netflix wants to “make sure games are a truly valuable part of our members’ subscription.”

Netflix currently offers 23 games. Headers like Queen’s Gambit in chess as well as Stranger Things 1984 show that Netflix is ​​trying to attract players to its popular content. However, this method makes a serious assumption that fans of these series are also at least partially interested in the games.

Meanwhile, a streaming competitor Apple (AAPL 1.15%) has steadily expanded its services business, introducing Apple Arcade in September 2019 and similarly providing consumers with an ad-free gaming service alongside other offerings such as Apple TV+.

Instead of focusing its gaming content on its streaming originals like Netflix, Apple has gone straight to the source, bringing mobile games from popular gaming brands to subscribers. Apple Arcade currently offers games from established franchises such as lego, PAK-MAN, Sonic, cooking mom, and more. Apple’s approach increases the likelihood that its players are already fans of the games, increasing the chances of retaining subscribers. This approach appears to be paying off: JP Morgan estimates that Apple Arcade’s revenue will increase by 14% to $1.2 billion a year by 2025.

very strange things games

Gaming is a notoriously difficult and competitive industry to enter. If Netflix Games is going to help attract and retain subscribers, Netflix will need to offer popular games on par with its mega-hit series. very strange thingswhich racked up a record 286.79 million hours watched in its final season’s opening weekend.

Microsoft (ISFT 1.09%) launched its subscription-based Xbox Game Pass gaming service in 2017, which has become the industry model for game subscription services, generating over $3 billion a year. It is home to several Xbox exclusives and one of the highlights is Halo series. By acquiring popular developers such as ancient scrolls as well as fall out Developer Bethesda Softworks, Microsoft has given Game Pass subscribers access to a library of major franchises for the low price of $9.99 per month.

Netflix built streaming from the ground up and has a track record of breaking down barriers. It’s entirely possible that the company has a solid gaming strategy in place. But while Netflix was first in streaming, it is now trying to break into a long-standing, well-established industry filled with tough competitors.

Previous companies with even greater financial power have tried and failed. Google (google 1.05%)whose parent company is 18 times the size of Netflix, having launched its subscription-based Stadia cloud gaming service in November 2019. Destiny 2, one of the biggest and most popular games on consoles and PC. Stadia’s share then declined to 0.08% in 2022 as the company struggled to compete with established companies like Microsoft and Sony. Netflix Games will need to convince subscribers that their platform is worth giving preference to the competition.

The future of Netflix gaming

Adapting a game to a movie is a current trend across almost all streaming platforms. Previously, Netflix had success with its adaptation of the series. Witcher and announced several other television adaptations of the game in development based on Resident Evil, Assassin’s Creedas well as Cyberpunk.

If Netflix can work with the studios behind these games to tie the release of an adapted series to a mobile game within the same franchise, the company will have a better opportunity to tie Netflix Games to hard-core gamers who are more likely to stay. signed up for a long time.

Streaming investors should keep an eye on future acquisitions by game developers Netflix. Studios that run popular game franchises will be worth their weight in gold for Netflix as the company can use their intellectual property to further attract more players and subscribers.

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