Netflix is set to significantly increase its investment in the gaming sector, a notable shift after previously scaling back its ambitious plans, including the closure of a studio led by former Halo veteran Joe Staten.
During Netflix`s recent earnings call, co-CEO, president, and director Greg Peters outlined the company`s refreshed gaming strategy. He noted that current gaming investments are modest compared to its substantial spending on films, TV series, and live sports, underscoring a significant untapped growth opportunity.
Peters explained that the near-term monetization potential for games mirrors that of other content categories like scripted shows or films. He believes that by enhancing the value of their gaming offerings, Netflix can boost user acquisition, improve retention, and encourage subscribers to pay more, thereby strengthening core business metrics.
Despite observing `positive effects` from their initial gaming ventures, Peters emphasized that current gaming investments remain a minor portion of Netflix`s overall business. He also acknowledged that the proportion of users engaging with Netflix games is still low, citing 2022 data that showed 99% of subscribers did not play them, a figure predating the addition of titles like Grand Theft Auto.
Netflix plans a `disciplined` approach to gaming investments, Peters stated. The aim is to avoid overspending until they can definitively prove the creation of `value for our members` through these initiatives.
Peters highlighted the success of both licensed games, such as Grand Theft Auto, and internally developed titles like Squid Game: Unleashed. He indicated that Netflix would expand in both areas, alongside introducing new interactive experiences where the company believes it holds a unique advantage. These new offerings are slated for release over the coming year.
Currently, Netflix includes games as part of its standard subscription, free from ads or microtransactions. While speculation exists about future monetization strategies, Peters confirmed Netflix is `open` to `evolving our monetization model` for games. However, he stressed the priority is to achieve `a lot more scale` before such changes become a significant consideration.
Peters concluded by emphasizing the `very, very large` total addressable market (TAM) for gaming, which presents substantial potential for growth and revenue. He reiterated Netflix`s conviction in its strategic opportunity and its enthusiasm for future advancements.
During the briefing, Netflix management also affirmed their continued investment in `immersive, narrative games based on our IP.` Examples include Thronglets, launched for Black Mirror Season 7 and featured in its `Plaything` episode, and new content for Squid Game: Unleashed, aligning with its recently released third season.
Netflix`s upcoming gaming releases will concentrate on four key categories: party games, kids` games, narrative experiences, and `mainstream` titles. These games are designed for mobile devices and direct streaming to TVs via Netflix`s platform, with no current plans for Xbox or PlayStation console releases.
For several years, Netflix has been testing direct game streaming to TVs and computers, complementing its existing mobile game offerings.
Alain Tascan, Netflix`s gaming boss, likened their journey to that of a musician: “We start by imitating a few things, and then at some point, we`re going to find our voice.” He expressed strong optimism about the company eventually defining its unique identity in the gaming space.
Regarding the closure of their AAA studio and the cancellation of Joe Staten`s new game, Tascan clarified that this decision doesn`t reflect a disinterest in `big ambitious games.` Instead, he stated the specific genre the studio was developing wasn`t `matching the platform`s vision.`
In related Netflix news, the company recently greenlit a live-action Assassin`s Creed TV series, a project that has reportedly been in development for five years.