On July 20, in a letter to shareholders, Netflix disclosed that revenue increased 19% Y-O-Y in quarter two and operating income rose 36% Y-O-Y. Additionally, the Los Gatos, California-based company said it's making its most significant expansion into a new form of entertainment since it released its first original show in 2012: gaming.
For some time, Netflix has made it clear that it’s been playing around with interactivity. Most notably was its 2018 release of Black Mirror: Bandersnatch, an interactive film where viewers make decisions for the main character. The choose-your-own-adventure movie took Netflix viewers by storm upon its release, demonstrating to Netflix that gaming could very well be a new content category for them. After several recent successes, including finishing Q2 with more than 209 million paid memberships, ahead of its original forecast, Netflix has decided to take that optimism and turn it into reality by hiring Facebook gaming executive Mike Verdu to help develop games for its platform.
Here’s everything we know about the company’s latest entertainment venture.
The Facts
The entertainment world used to refer to Gamepass, a video game subscription service, as the Netflix for games. Clearly, Netflix was listening and decided to join the billion-dollar industry by announcing that it’s developing games for its platform. After all, as we previously covered, video game publishing is a very profitable business, and many streaming services want to be part of it.
At the moment, information is limited, but it has been made clear that Netflix is taking a page from already established gaming platforms, such as online casinos, which offer users free spins no deposit deals, allowing them to play online slots for real money without additional costs (i.e. making a deposit and wagering their own bankroll.) Netflix is doing something similar. According to the company’s shareholder letter, Netflix will include the games at no additional cost. “We’re a one-product company,” said co-CEO Reed Hastings during the company’s Q2 earnings call. That product, he described, is an all-in-one subscription that includes films, TV series, and now, games.
As for the type of games Netflix will be developing, the company stated that, initially, its focus is games for mobile devices. The company has yet to announce specific games that will be added to its roster. However, there’s speculation it may be experimenting with creating games based on popular Netflix franchises. For instance, Netflix and Shonda Rhimes recently extended their creative relationship, which, under the terms of the new deal, will see Netflix and Rhimes’ Shondaland Media produce and distribute films, in addition to potential gaming and virtual reality content. As such, we may very well see virtual reality games based on popular shows like Bridgerton.
Further Expansion Down The Line
Ever since Netflix started streaming in 2007, the company has been a trailblazer in the entertainment industry. Over the years, the company has witnessed increasing competition, such as Amazon Prime, but Netflix’s move into gaming may take it back to the top of the leader board. In fact, if all goes well, the company could even expand into other forays of video gaming in the coming years.
For instance, while Netflix is only focusing on games for mobile devices at the start, many speculate that, down the line, the platform will expand to PlayStations, computers, and Xbox. Such a move makes sense considering so many console devices support Netflix. The company could also collaborate with existing companies in the video gaming industry or develop games based on famous casino slot games, which, alongside video games, is a popular section of the global gaming industry. For example, Mega Moolah is a popular and exciting casino slot that could be translated into a game on the Netflix platform.
Following Netflix’s shareholder letter, NFLX stock gained nearly 3% in premarket trading. Many seem onboard with the streaming service moving into gaming, in part because members will be able to access these games without making an additional deposit. Netflix has spent almost a decade experimenting with original programming, and it has been an extremely successful decade. Now that the company is focusing on the gaming industry, we can only think that if this move is anywhere near as successful as its original programs, Netflix games will be the world’s next obsession.
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