Since November 2021, Netflix, which recently passed 300 million subscribers globally, has been trying to convince users, investors and developers alike that one of the answers to that question can be video games.
And it has put real money behind that conviction. By fall 2023, according to widely cited reports, Netflix had spent $1 billion on gaming, buying up four smaller development studios and building two of its own, while publishing dozens of titles for mobile devices, including tower defense game Bloons TD and graphic adventure Oxenfree.
Analysts believe the company likely spent another $1 billion on gaming in 2024 alone, increasing its offering to 140 games made available to anyone with a Netflix subscription, all without ads or in-app microtransactions. Traction in the gaming marketplace has been harder to come by.
Netflix’s portfolio of mobile apps has recorded 192 million total downloads, according to data provider Apptopia, and daily active user counts hover around 1.1 million, each fractional compared with mobile publisher competitors and even smaller in relation to Netflix’s overall subscriber base.
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And it has put real money behind that conviction. By fall 2023, according to widely cited reports, Netflix had spent $1 billion on gaming, buying up four smaller development studios and building two of its own, while publishing dozens of titles for mobile devices, including tower defense game Bloons TD and graphic adventure Oxenfree.
Analysts believe the company likely spent another $1 billion on gaming in 2024 alone, increasing its offering to 140 games made available to anyone with a Netflix subscription, all without ads or in-app microtransactions. Traction in the gaming marketplace has been harder to come by.
Netflix’s portfolio of mobile apps has recorded 192 million total downloads, according to data provider Apptopia, and daily active user counts hover around 1.1 million, each fractional compared with mobile publisher competitors and even smaller in relation to Netflix’s overall subscriber base.
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Stay Connected
Forbes on Facebook: http://fb.com/forbes
Forbes Video on Twitter: http://www.twitter.com/forbesvideo
Forbes Video on Instagram: http://instagram.com/forbesvideo
More From Forbes: http://forbes.com
Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.
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GamingTranscript
00:00Today on Forbes, streaming giant Netflix has been unable to disrupt the video game market.
00:07But armed with massive resources and time, it's making a new push to level up what could leave its competitors in the dust.
00:15Netflix has won the streaming wars. Case closed, wrote analyst Robert Fishman in a Moffett Nathanson report on the streamer's recent earnings update.
00:24But where does the company go from here? How much more runway for growth is ahead, he asks.
00:31Since November 2021, Netflix, which recently passed 300 million subscribers globally, has been trying to convince users, investors, and developers alike that one of the answers to that question can be video games.
00:45And it has put real money behind that conviction.
00:48By fall 2023, according to widely cited reports, Netflix had spent $1 billion on gaming, buying up four smaller development studios and building two of its own,
01:00while publishing dozens of titles for mobile devices, including tower defense game Bloons TD and graphic adventure Oxenfree.
01:08Analysts believe the company likely spent another $1 billion on gaming in 2024 alone, increasing its offering to 140 games made available to anyone with a Netflix subscription,
01:21all without ads or in-app microtransactions.
01:25Traction in the gaming marketplace has been harder to come by.
01:28Netflix's portfolio of mobile apps has recorded 192 million total downloads, according to data provider Aptopia,
01:37and daily active user counts hover around 1.1 million, each fractional compared with mobile publisher competitors,
01:45and even smaller in relation to Netflix's overall subscriber base.
01:50As he presented at the Games Developers Conference in San Francisco,
01:54Netflix president of games Alan Taskin said,
01:57We're not yet the Netflix of games, but that's exactly where we're headed.
02:03Going forward, Netflix games will focus on the development of more games that can be played inside the Netflix app on connected smart TVs,
02:12where 70% of Netflix viewership already happens, utilizing phones as the controller via a mobile app.
02:18The service wants to build more, quote-unquote, interactive experiences that can extend the life of Netflix's IP from popular homegrown shows and movies,
02:29as it has done with Squid Game and Too Hot to Handle.
02:33That's a far different strategy from the traditional idea of the Netflix for games,
02:37under which startups like Black Nut and Shadow, as well as tech giants such as Google Stadia, Apple Arcade, and Microsoft Xbox Game Pass,
02:47have built a cloud-based library of games that can be sold for a subscription.
02:50Netflix's pivot also seems to remove it from the race to create the next blockbuster game like Fortnite or Call of Duty Warzone,
03:00evidenced first in October by dozens of layoffs and the shuttering of its California studio,
03:05which was focused on bigger-budget AAA game projects, before it had published a single title.
03:10The evolution from linear passive entertainment on Netflix to more interactive experiences makes a lot of sense in theory.
03:19The $180 billion gaming industry now dwarfs the size of traditional Hollywood movies and television,
03:26estimated at $100 billion annually, and has become the preferred pastime for younger generations.
03:31However, Netflix's early efforts at line-blurring interactive content,
03:37such as the headline-grabbing Black Mirror Bandersnatch, did not catch on,
03:42and in November, the company announced it would be removing dozens of similar titles from its library entirely.
03:49Bandersnatch is one of only four that remain.
03:53To date, Netflix has yet to create a game or any game-like experience
03:58that has captured and maintained the interest of the broader public over an extended time.
04:04Even Squid Game Unleashed, which the company touts as one of its biggest success stories,
04:09hit 6 million downloads when it debuted in December,
04:12peaked at nearly 13 million downloads in January,
04:15and then fell to 700,000 in February.
04:19Notably, that game is the first not to require its players to have a Netflix subscription to play.
04:24Netflix's answer, in the short term, has been licensing.
04:30In December 2023, the company announced it would be offering three old Grand Theft Auto titles
04:35to anyone with a Netflix subscription.
04:38And to date, Grand Theft Auto San Andreas has been its most downloaded and played game by far.
04:44What Netflix Games has in its favor is the time and resources to experiment.
04:49The company grew its overall revenue by 16% in 2024,
04:54generating $10 billion in operating income and nearly $7 billion in free cash flow.
05:01Taskin acknowledges that is a privileged position to be in in a game's landscape
05:05that faced industry-wide layoffs, budget cuts, and company closures in 2024.
05:11He says, quote,
05:12I say sometimes to the team, we have a golden ticket.
05:16What are we going to do with it?
05:19What are we going to do with it today?
05:20What are we going to do?
05:22What is it?
05:23We're going to do with it today.
05:24We'll see you on Friday in the week.
05:26We're going to go with it today.
05:27Okay.
05:28We're going to do
05:44we're going to do
05:45for another 40-poCall.