Netflix moves into Gaming – a stroke of genius or a necessity following subscriber decline?

Netflix has confirmed it is moving into video games as it reported a sharp slowdown in subscriber growth. Is this move a stroke of genius or a proactive measure to keeps eye on screen and on Netflix, and what could this mean for the future of gaming?

 

The streaming giant – known for series such as Bridgerton and The Crown – have confirmed that games will soon be available for paying customers at no extra cost with an initial focus on games for mobile devices. The move has coincided with the appointment of former Oculus Content VP – Mike Verdu – now, the new Vice President of Game Development.

 

This announcement and appointment are the first big moves toward an expansion into videogames. Netflix said in their recent statement that the move into gaming represented a new content category “similar to our expansion into original films, animation and unscripted TV”. Executives said it would be “relatively small” to start off, with the first games tied to Netflix hits. Chief operating officer Greg Peters added: “We know that fans of those stories want to go deeper. They want to engage further.”

 

Netflix disclosed the much-anticipated news as it reported the addition of just 1.5 million subscribers in the April-June quarter, the slowest growth for eight years though ahead of its own forecast of 1 million. In the same period a year ago it added more than 10 million customers and for 2020 they signed up 37 million as the pandemic prompted a surge in demand from consumers spending much more time at home.

 

Netflix said the pandemic had resulted in “unusual choppiness” in its growth and forecast a better third quarter, with 3.5 million subscribers expected to be added. Though growth has slowed, the company boasts 209 million subscribers and generated revenues of £5.4bn for the latest quarter, £0.88bn higher than a year ago.

 

Now the announcement has been made, Netflix will be keen for this to work, and with such deep pockets – they have the funds to ensure this new side of the business model is a success. Whether or not Netflix have their sights on becoming a destination for Gaming is yet to be seen. The company has acknowledged in the past that it competes with games more for the attention they provide, with co-CEO Reed Hastings writing that “we compete with (and lose to) Fortnite more than HBO” in 2019.

 

Netflix aren’t the first super brand to set their focus on the gaming sector and certainly won’t be the last. Google launched Stadia back in November 2019, breaking into the console market for the first time. They also launched Google play pass alongside Apple’s Apple Arcade in September 2019, both mobile gaming subscription services. The gaming sector was reported to be worth over $159bn globally in 2020 and that number is only increasing. Any brand looking to fight for audience time in the future needs to strongly consider what their gaming strategy looks like moving forward and we believe will see a lot more ventures like this for big global brands in the future.

 

At Generation Media, we have recently completed a full Gaming White Paper, which analyses the current state of the Games, App & Console Markets. For more information, please contact myself or another member of the team.