Netflix is becoming more aggressive in its push into gaming, but less than half of the streaming giant’s subscribers are playing at the moment. In fact, it plans to double its video game catalog by year’s end. Games have been rolled out since November to keep users engaged between show episodes. The games are accessible to subscribers on the Netflix app.
Isn’t Netflix streaming service, why games?
In a streaming market dominated by Netflix, Amazon Prime Video, Hulu, and Disney Plus are its most obvious competitors. However, Netflix has other plans. Rather than competing for the title of leading streaming service, it vies for users’ attention.
Gaming is therefore an appropriate addition to its entertainment offerings. In between movies and shows, subscribers can play games on Apple iOS and Android devices. Netflix’s subscriber base has also been declining, and it’s not surprising that Netflix is interested in exploring a different demographic.
Over the past year, Netflix has acquired three mobile game studios in order to broaden its entertainment offerings. Recently it acquired Finnish developer Next Games for a total value of $72 million. As per stats obtained by CNBC, Apptopia estimates that Netflix games have been downloaded 23.3 million times, with an average daily user of 1.7 million people.
That may sound impressive on paper, but it represents less than 1% of Netflix’s 221 million subscribers. This data appears to indicate that approximately 200 million people who have access to Netflix’s game library are currently not playing them or are unaware of its existence.
The reason? A big problem with Netflix is that not many of its subscribers care, and it does not spend much on PR campaigns. Despite owning all three game studios, the company spends more on one big-budget movie than it does on all three. However, Netflix is now bringing AVOD to the forefront, hopefully selling more subscriptions while compensating for any revenue losses (and increasing revenue).
The importance of games to Netflix’s overall strategy has arguably grown in recent months, as the company competes for user attention more aggressively. Netflix lost nearly a million subscribers in the Q2, after losing 200,000 in the first — its first major subscriber decline in more than a decade.
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TikTok, a strong competition
Video games are a multi-year endeavor that requires a dedicated and talented team. Even though Netflix produces good games like Stranger Things, Exploding Kittens, or Moonlighter, it takes more than a few titles to entice the gamers away from their Xbox, Playstation, or Apple Arcade and play them. Netflix understands that apps like TikTok are its main competitors for mobile attention.
Netflix named Epic Games and TikTok as two of its main competitors for people’s attention. The company claimed they are in the early stages of expansion into games and view it as another new content category. A key benefit of the strategy for Netflix is that it can drive engagement beyond the show’s initial release and revenue.
A lot of ambiguity
Netflix has been tight-lipped about how it intends to make video gaming a core component of its strategy. According to CNBC, Netflix appears to have taken a risk, as COO Greg Peters stated last year that the company was “many months and really, frankly years” into learning about the gaming industry. In the Q4 earnings call, he also said,
“We’re going to be experimental and try a bunch of things. But I would say the eyes that we have on the long-term prize really center more around our ability to create properties that are connected to the universes, the characters, the stories that we’re building.”
Leanne Loombe, Netflix’s head of external games, said during a panel at the Tribeca Film Festival in June.
“We’re still intentionally keeping things a little bit quiet because we’re still learning and experimenting and trying to figure out what things are going to actually resonate with our members, what games people want to play.”
The streaming service hinted earlier this year that it would license popular intellectual property for its new gaming offerings. However, there are no details on investment in this capital-intensive segment.
As projected by Apptopia, Netflix games have less than a quarter of the downloads of the top mobile games. Examples include Subway Surfers, Roblox, to name a few and each has over 100 million downloads. As quoted by CNBC, Netflix co-CEO and co-founder Reed Hastings said earlier,
“We’ve got to please our members by having the absolute best in the category.“We have to be differentially great at it. There’s no point of just being in it.”
Despite that, Netflix plans to double the number of games in its library from 24 to 50 which will also include Queen’s Gambit Chest based on the show by the end of this year. Netflix’s games aren’t attracting anyone despite a solid list and a small percentage of subscribers playing them. On the other hand, there are hundreds of lousy mobile games that have twice as many downloads.
Evidently, gaming is still in the infant stage for Netflix. Considering the company is looking to reduce expenses, is it worthwhile to invest more money in this gaming experiment?
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