Netflix is set to significantly increase its investment in gaming, a strategic move following its earlier decision to scale back ambitious AAA game development and the closure of a studio led by Halo veteran Joe Staten.
During a recent earnings briefing, Netflix co-CEO and president Greg Peters highlighted that the company`s gaming investment, though growing, remains modest compared to its expenditures on film, TV, and live sports. He emphasized the substantial opportunity for growth in the gaming sector. Peters explained that enhancing the gaming catalog is akin to expanding other content categories: “If we deliver more value to our offering, we get increased user acquisition, we get increased retention, we get increased willingness to pay.” This approach, he noted, strengthens the fundamental pillars of Netflix`s business model.
Peters confirmed that initial investments in gaming have yielded positive results. However, he cautioned that the scale of gaming within Netflix`s overall operations is still relatively small, as is the number of subscribers actively engaging with games. A 2022 survey indicated that 99% of Netflix users didn`t play its games, though this data predates the inclusion of popular titles like Grand Theft Auto.
Netflix intends to maintain a disciplined approach to its gaming investments, prioritizing the demonstration of tangible value for its members before committing to larger-scale projects. The company has observed strong performance from both licensed games, such as Grand Theft Auto, and internally developed titles like Squid Game: Unleashed. Peters indicated a continued focus on both categories, alongside plans to introduce new, unique interactive experiences over the coming year.
Currently, Netflix games are included as part of the streaming subscription, free from ads or microtransactions. While the company is “open” to evolving its monetization model for games in the future, Peters stressed that significant user scale must be achieved before such changes become materially relevant. He also pointed out the immense “total addressable market” (TAM) in gaming, signaling vast potential for growth and revenue. Netflix remains confident in its strategic opportunity and its progress in this domain.
The briefing also revealed Netflix`s ongoing commitment to “immersive, narrative games based on our IP.” Recent examples include Thronglets, a game tied to Black Mirror Season 7, and new content for Squid Game: Unleashed inspired by its third season.
Netflix`s upcoming game slate will concentrate on four key areas: party games, kids` games, narrative games, and mainstream titles. These games are designed for mobile devices and direct streaming to TVs via Netflix`s own systems, with no current plans for release on Xbox or PlayStation consoles. The company has been testing direct game streaming to TVs and computers for several years.
Alain Tascan, Netflix`s gaming boss, likened their journey to a musician finding their voice. He acknowledged that while they initially “copy a few things,” they are “very bullish” about ultimately defining their unique gaming identity. Regarding the closure of the AAA studio and the canceled game from Joe Staten, Tascan clarified it wasn`t a rejection of “big ambitious games.” Instead, the genre of the game being developed was not deemed a good “match for the platform,” meaning Netflix wasn`t the ideal partner for that specific team`s expertise.
In related news, Netflix recently greenlit a live-action Assassin`s Creed TV series, which has been in development for five years.