Netflix gaming: a new frontier for the streaming behemoth

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Gaming on Netflix isn’t new

In 2021, the streaming titan Netflix took a significant leap into unfamiliar territory by acquiring Night School Studio, marking the beginning of its journey into the gaming world. Following this acquisition, Netflix Games swiftly became a prominent feature on the platform, specifically tailored to meet the growing demand of mobile gamers. Distributed across the 190 countries where Netflix offers its services, these games – some of which are based on fan-favorite Netflix original series like ‘Stranger Things’ and ‘Too Hot to Handle’ – represent a keen understanding of their core audience. Interestingly, Netflix chose an understated entry into this space. Leanne Loombe, Vice President of External Games at Netflix, emphasized the company's strategy of keen observation and understanding the nuances of the gaming market before making grandiose announcements.

Why the expansion into gaming?

Netflix's strategic shift towards gaming has raised questions; being a dominant force in the streaming world, why venture into this new domain? The answer lies in the meteoric rise of video gaming. While gaming has always had a passionate following, the Covid-19 pandemic magnified its appeal. Mobile gaming, representing a staggering $150 billion in annual global earnings, stands out as the crown jewel of the gaming industry. Projections indicate that this figure will increase to $173.4 billion by 2026, fueled by the global adoption of smartphones and enhanced mobile tech. Netflix's decision to tap into this sector, boasting approximately 1.9 million daily active users and 28 million installations (as cited by Apptopia), is not merely experimental, but a calculated expansion.

The nuances of advertising in gaming

In the realm of mobile gaming, in-app advertisements (IAAs) have become the standard for monetization, especially for free-to-play games. These ads offer a dynamic method for brands to engage their target demographics, marrying gameplay with subtle marketing. However, Netflix Games has chosen a path less traveled, providing an ad-free gaming environment.

Rather than relying on intermittent ads, Netflix's vision for gaming revolves around enhancing user engagement on its platform. In an age where entertainment options are vast - spanning traditional TV, streaming, user-generated content, and gaming - Netflix is likely seeking to consolidate these experiences. By integrating diverse entertainment forms, the streaming giant aims to become a one-stop hub, ensuring users remain within the Netflix ecosystem for as long as possible. By embedding gaming into its platform, Netflix is positioning itself as a comprehensive entertainment provider, especially appealing to a younger demographic.

This holistic approach indirectly benefits advertisers too. As the largest streamer in the world, Netflix already has a large proportion of the streaming market, meaning there is little room for growth in that sector. By expanding into gaming, it will capture the attention of the gaming market, thereby potentially increasing the number of consumers who subscribe to the new ad-supported tier – and diversifying that audience as well.

Roadblocks and realities

Venturing into gaming doesn't come without challenges. By August 2022, data showed that a mere 1% of Netflix's user base was engaging with its games – although this could simply be due to lack of awareness. Standing shoulder to shoulder with established names like Supercell, PlayStation and Nintendo requires more than just capital; it demands a unique offering, relentless innovation and smart, effective marketing.

The journeys of tech giants like Amazon and Google into the gaming sphere provide vital lessons. Their experiences have shown that creating a footprint in gaming isn't solely about financial might; it's about understanding gamers, fostering innovation, and being patient. For Netflix, aligning its core strength in streaming with the dynamic world of gaming is crucial.

Forecasting Netflix's gaming future

Netflix's partnerships with seasoned gaming studios exemplify its strategy of blending expertise with innovation. Given the vast scale of Netflix's operations, one can anticipate more synergies with game producers, potentially leading to unique and engaging titles.

While adaptations of its blockbuster shows might be the initial focus, Netflix has the potential and resources to further push the boundaries. Their trove of exclusive content, spanning genres and cultures, provides them with a unique edge. As they continue to expand their repertoire, it's plausible that users will dedicate even more of their entertainment hours to Netflix, be it for streaming or gaming. It will be interesting to see whether Netflix’s gaming offering eventually gets the same treatment as its streaming platform, with premium, ad-free tiers and a cheaper, ad-supported tier. The opportunities for intelligent, thoughtful advertising could be exciting indeed.

In summary, Netflix's foray into gaming is emblematic of its vision to remain a leader in the evolving entertainment landscape. Only time will reveal the full scope of its ambitions, but for now, it's evident that Netflix is playing a strategic game, aiming for a checkmate in the entertainment industry.

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Image: Shutterstock/Gorodenkoff

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