Netflix began by shipping DVDs via the post to customers. It began streaming movies and TV shows from other sources. It then began making its own TV shows and movies. Next came video games.
Netflix officially informed investors Tuesday that the company is in the “early stage of further expanding into gaming,” stating that this extension of its experiments with a few interactive programs that allow users to choose their adventure style, such as 2018’s Bandersnatch.
This is a surprising and obvious move, and we’ll discuss it in a moment. Here’s how Netflix claims it will work.
- These games will be included free in Netflix’s main app. They will initially be available for play on mobile devices. However, they could eventually migrate to TVs.
- The company believes that some of its games can be connected to Netflix-owned franchises. You can certainly imagine a Stranger Things video, but not one about Sex/Life. However, it could also license existing brands and games from other developers.
- Netflix describes its foray into gaming as an initial venture. The company stated in its quarterly earnings release that it believes the time was right to find out more about the value of games. However, the company also said that it plans to stay in gaming for the long-term. Greg Peters, chief operating officer of the company, stated that “this is a core component of our subscription offer.”
- According to the company, the key benefit of the games is keeping current subscribers engaged with Netflix and making them less likely to unsubscribe. In theory, the games could drive new subscriptions.
You have probably seen this move in Netflix’s history if you have been paying attention over the years. Netflix CEO Reed Hastings has long thought about the fact that video games offer a significant source of income for Netflix users. The Information reported this spring that Netflix was looking at offering subscribers a bundle of games, similar to those offered by Apple’s Apple Arcade. Bloomberg also reported last week that Netflix had hired a senior executive to manage its new games service.
However, if you have been paying attention to Netflix over time, you might also see this as a departure from Netflix’s strategy, namely its insistence that you do one thing well.
Netflix executives have been repeatedly asked about their plans to expand into live sports and live news. Netflix executives always respond the same way: They believe that a single-minded focus is best for winning, so expanding beyond TV shows and movies on-demand would be distracting.
The company now says it is open to trying new things, but that it believes free games are a reasonable extension of its existing activities. With the company’s subscription model, “We don’t have to think [in games] about ads.” Peters stated during the earnings call that we don’t need to think about in-game purchases, other monetization, or per title purchases.
Netflix is allowed to host video games, but it doesn’t know much about hosting or making them. It claims it doesn’t know how to make its own content, but it did agree to make House of cards in 2011 and it has been fine ever since.
This seems a bit too optimistic. Netflix tells the story of its first attempt to create original content. It stated that House of Cards was what it expected its customers to like because they liked dark political soap operas. Netflix was 10 years old when it began making shows. But it didn’t have to know: It paid Kevin Spacey and David Fincher to create the show and then streamed it to its customers in the same way that it had streamed other movies and shows.
However, making games is a different skill than making TV shows. This is why many big entertainment companies have failed to enter the game industry. Big tech companies such as Google, Apple and Amazon have also all failed to succeed to some degree. It’s possible that Netflix’s entry into the games market could also fail.
The other side is that games are bigger than Hollywood and won’t go away. Even the most hidebound Hollywood executive will admit it. It’s better to start sooner than later if it takes a while to understand.
Published on Wed, 21 July 2021 at 03:13:21 +0000