Netflix is ​​taking a slow approach to video games

It’s been almost two years since Netflix first announced its foray into gaming. Still, as Netflix has more than tripled its game library from 24 to 77 games in the past year, subscribers have largely shrugged it off.

However, this is all part of the plan, according to Netflix.

“This trajectory is no different than what we’ve seen before,” co-CEO Greg Peters said during the company’s pre-recorded earnings call on Wednesday. “When we launched a new region — or when we launched new genres, like unscripted,” we had to “crawl, walk, run, but we see a tremendous amount of opportunity to build long-term core entertainment value.”

Netflix’s push into gaming is part of a larger effort to plant seeds for future revenue streams to offset a potentially saturated subscriber base. Others include sports and retail, each in early stages of development.

“The more potential revenue streams [Netflix] are throwing out there, the more stuff they can put on during an earnings call in the future when the passphrase is over and they’re not adding new subscribers,” said Insider Intelligence analyst Ross Benes.

Netflix has announced that it is taking gaming seriously in 2021, releasing titles as standalone apps for mobile phones. Netflix said the games are a strategy to keep subscribers engaged between seasons of their favorite shows, such as “Stranger Things,” which has been adapted into two games.

Since 2021, the company has attracted several big names in the gaming space. Former Electronic Arts mobile gaming executive Mike Verdu is joining Netflix as vice president of game development in 2021. Joseph Staton, who was the creative director of Microsoft’s Halo Infinite game, announced in February that he join Netflix as “Creative Director for Brand New AAA Multi-Platform Game and Original IP.”

Getting existing subscribers to download and play mobile games, however, is a challenge, Benes noted. More than three-quarters of all streaming service subscriptions are used on a TV screen, according to data released last year by video analytics firm Conviva. This presents a hurdle for Netflix in marketing its library of mobile games to existing subscribers, as customers are reluctant to use Netflix on their phones.

As of September 2023, Netflix games have been downloaded 70.5 million times worldwide, according to data obtained by Apptopia. An estimated average of 2.2 million users played one or more of Netflix’s games per day, although Netflix adds new games almost every month, according to Apptopia. Average daily users peaked at 2.7 million in January 2023, but fell below 2 million between March and July, bottoming out at 1.45 million average daily users in March.

Those numbers suggest that less than 1% of Netflix’s 247.15 million subscribers play a game on a daily basis, even though the game library has tripled in its offerings over the past year.

Other mobile game publishers are far ahead of Netflix in downloads. Since the creation of Netflix’s first offering, Gardenscapes publisher Playrix has had 531 million downloads, Candy Crush King has 438 million downloads and Clash of Clans owner Supercell has 388 million downloads, according to Apptopia.

With a lack of interest in its mobile games, however, Netflix has begun testing new games that can be played on any device, Netflix’s vice president of games, Mike Verdu, said in an August post. The beta for limited users in Canada and the UK includes Oxenfree from Night School Studio, a Netflix game studio, and Molehew’s Mining Adventure, a gem-mining arcade game. Games played on a TV will require players to use a mobile phone as a controller, accessible through the Netflix app on Android and a separate controller-specific app on iOS.

Peters said earlier this year that games are “following a trajectory that we’ve seen before” with new categories of content “where we seem to be building into that over a multi-year period,” but declined to divulge specifics.

Mention of any gaming development was notably absent from the company’s second-quarter earnings conference call earlier this year, raising suspicions that Netflix may be preparing to abandon the effort.

But it wasn’t like that. The Wall Street Journal reported last week, ahead of Netflix’s third-quarter earnings report, that the company plans to adapt more of its big-name series, such as Wednesday, Black Mirror and Squid Game, into mobile games. The streaming giant is also considering releasing an iteration of Grand Theft Auto through a licensing deal, the Journal reports.

Games then made a brief appearance on Netflix’s pre-recorded third-quarter earnings conference call, where Peters said that gaming engagement is currently “driving core business metrics in a way that is incremental to movies and series.”

Netflix’s attempt to woo gamers also faces technological hurdles.

“I don’t think mobile gaming but on a bigger screen is something I would be optimistic about,” said Sunny Dillon, founder of VC gaming firm Kyber Knight.

“The bandwidth and the servers that are used are inherently disruptive to the gamer,” Dillon said. “I don’t think we’re at a place where streaming multiplayer hardcore games can be played successfully just because of the lag.”

But Netflix isn’t aiming to be a console replacement, Netflix gaming executive Verdu told Tech Crunch earlier.

“It’s a completely different business model. We hope that over time it just becomes this very natural way to play games wherever you are,” said Verdu.

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