For the past two years, Netflix subscribers have enjoyed the perk of downloading a plethora of mobile games, all seamlessly included in their subscription. Netflix has successfully crafted over 75 mobile games, featuring popular IPs like Grand Theft Auto, Love Is Blind, Monument Valley, Oxenfree, and more. However, recent reports suggest that Netflix is contemplating strategies to turn its gaming venture into a revenue-generating powerhouse.
The Evolution of Netflix Gaming
Initially providing a diverse array of mobile games at no additional cost, Netflix’s gaming portfolio has become a significant draw for subscribers. Boasting a rich collection of titles, the streaming giant has managed to integrate well-known intellectual properties, creating a unique intersection between entertainment and gaming.
The Potential for Revenue Generation
According to The Resources, Netflix has been engaged in discussions about potential revenue streams from its gaming segment. Among the considered options are in-app purchases, pricing more premium titles, and introducing ads to games accessible by subscribers in its ad tier. These revenue models, prevalent in the mobile gaming industry, align with a market that is projected to witness consumers spending a staggering $111.4 billion on mobile games in 2024.
Netflix’s Stance and Possible Shifts
Despite the ongoing discussions, Netflix has remained tight-lipped about its future plans for gaming monetization. The company declined to comment on the recent speculations. An earlier statement made during an earnings call in April 2023 suggested a commitment to offering a differentiated gaming experience, focusing on player enjoyment without the interference of ads or in-game payments.
However, the landscape can evolve, as evident from Netflix’s historical shifts in business strategies. Netflix was initially against launching an ad-supported tier and taking a stern stance on password sharing. Still, the company pivoted after losing subscribers in 2022, marking its first subscriber loss in over a decade.
Contextualizing Netflix’s Business Position
The potential move to monetize games comes at a time when Netflix faced a slowdown in growth at the beginning of 2023, leading to a 3% reduction in its workforce. To offset these challenges, Netflix recently implemented a price increase, with the premium plan now costing $22.99 per month for new U.S. customers.
In 2022, Netflix posted a job listing for a game director to work on an AAA PC game, a project that can be significantly expensive in the gaming industry. According to the U.K. Competition and Markets Authority (CMA), AAA games can have development budgets exceeding $200 million. Netflix has reportedly considered charging for future high-budget games, with analysts estimating the company’s investment in gaming studios and the overall gaming business to be around $1 billion.
As Netflix continues to straddle the realms of streaming and gaming, the potential shift towards monetizing its gaming offerings marks a pivotal moment in the company’s trajectory. Balancing subscriber satisfaction, revenue generation, and evolving market dynamics, Netflix’s foray into gaming remains a dynamic aspect of its multifaceted entertainment ecosystem. The coming months will reveal whether the streaming giant opts to leverage its gaming catalog as a new avenue for revenue, further reshaping the landscape of streaming services in the digital age.