Netflix plans to “ramp up” its investment in gaming after the company previously pulled back from its grand ambitions in the AAA space and shut down a studio from Halo veteran Joe Staten.
As part of Netflix’s latest earnings briefing, co-CEO, president, and director Greg Peters commented on Netflix’s vision for gaming, saying Netflix’s investment thus far has been relatively small in comparison to the money it puts into film, TV, and live sports programming. The opportunity to grow is significant, he said.
“We look at the near-term monetization opportunity with games very similar to how we’ve looked at other new content categories. You can think in scripted or film or on and on. And that’s essentially, if we deliver more value to our offering, we get increased user acquisition, we get increased retention, we get increased willingness to pay,” he said. “So it drives all of the sort of core fundamentals of our business.”
Peters said Netflix has already observed “positive effects” of investing in gaming. However, he reminded people that Netflix’s investment in gaming remains “small” relative to the company’s overall business and that the number of people playing games on Netflix is small as well. In 2022, findings found that 99% of Netflix users did not play Netflix’s games, though this was before Grand Theft Auto came to Netflix.
Peters said Netflix is aiming to be “disciplined” with regards to its investment in gaming. The goal, he said, is to not invest too much before Netflix can demonstrate that it can create “value for our members.”
“We’ve seen good progress, as you know, with licensed games like GTA. We’ve seen good progress with the games we developed like Squid Game: Unleashed. So you’ll see more from us in both of those categories, as well as a whole new set of interactive experiences that we think that we’re either in a unique or differential position to deliver,” he said. “So we’re super excited to roll those out over the next year.”
Currently, Netflix’s games are included with a subscription to the streaming service, and Netflix’s games do not have ads or microtransactions. Some have theorized that Netflix might seek to monetize games in different ways in the future, but nothing is confirmed yet. Peters said Netflix is “open” to “evolving our monetization model” for games, but he said the company needs to “get to a lot more scale before that becomes a really materially relevant question. So we’re going to do that work first.”
Finally, Peters said people should remember that the TAM, or total addressable market, for gaming is “very, very large” and thus has significant potential upside in terms of growth and revenue. “We remain convicted about our strategic opportunity and excited to make more progress,” Peters said.
Also during the briefing, Netflix management said the company continues to invest in “immersive, narrative games based on our IP.” For Black Mirror Season 7, Netflix launched the game Thronglets, which was also featured in the “Plaything” episode. The Squid Game: Unleashed game, meanwhile, received new content themed around the recently released Season 3.
Netflix is now focused on four main areas for its upcoming games slate, including party games, kids games, narrative games, and “mainstream” games. These titles will be made for phones and to be beamed to TVs via Netflix’s own streaming systems–and won’t come to Xbox or PlayStation consoles.
For years already, Netflix has been testing streaming games directly to your TV or computer, in addition to launching games for mobile.
“It’s a little bit like a musician, we start copying a few things and then at one point we’re going to find our voice,” Netflix gaming boss Alain Tascan said. “I don’t know how long it’s going to take exactly, but I’m very bullish about us finding our voice.”
As for why Netflix shuttered its AAA studio and canceled the new game from Staten, Tascan said this wasn’t a signal that Netflix doesn’t want to make “big ambitious games.” Instead, he said the genre of what the studio was building was not “matching the platform.”
“This team was really good at what they were doing, but we wouldn’t have been the best partner for them to express their skills and their expertise,” he said.
In other Netflix news, it was just recently announced that Netflix had greenlit a live-action Assassin’s Creed TV series that has been in the works for a half-decade already.
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