Transmedia, but not like this
Why is Netflix's gaming plan leaving everything on the table?
Netflix’s gaming strategy has been a bit of a head scratcher from day one. There’s nothing new about content houses going into gaming, but they’re almost always licensing deals. You know, HBO says it wants to make a Game of Thrones mobile title and gives the IP to a studio to make it. The studio finds a publisher, the game comes out, HBO sits back and counts its royalty money without doing a whole lot. As we know, a lot of these are flops at worst, mundane at best. [Obviously there are major exceptions like Hogwarts Legacy.]
Which is why Netflix going into games was so exciting for me. Woah, not only is this media powerhouse—known for incredible original IP—going to make games, they:
Have massive distribution with 235M subscribers (and many more viewers) across mobile, PC, console, smart TV
Understand data and use it to make great content
Will obviously work super intimately with the in-house studios to do cool integrations and interactivity like we’ve never seen before. Like Bandersnatch, but better!
So far, this isn’t what’s happened.
Netflix’s foray into gaming has largely gone unnoticed by the average consumer, in part because Netflix has barely publicly mentioned it. The first phase looked similar to its early streaming plans: it bought a ton of studios in quick succession (at least 6), and used the back catalog for its first content. These games had nothing to do with Netflix IP, a trend that’s continued into more recent releases. For ages the Netflix apps did nothing to showcase games, and only later did Netflix bury the games carousel away from consumer view deep within the homepage UI—for a while only on mobile as far as I can tell, and eventually bringing it to other platforms.
Even the branded IP games it had created (prior to its major move into gaming) were discrete, like a few Stranger Things titles which weren’t shown on the Stranger Things series profile until recently. You had to dig.
Netflix has side-eyed games for a long time. In 2019, Reed Hastings famously noted that Fortnite was a bigger threat than HBO. Somewhere along the way they decided if you can’t beat ‘em, join ‘em. On the one hand, spending several hundred million dollars to invest in gaming is a major commitment for any company; on the other, it represents only a fraction of the $16.7B Netflix reportedly spent on content in 2022. The first inning of Netflix in games has been more of a rounding error than a strategy, and there’s nothing that entices players less than being an afterthought.
It’s no wonder, then, that only 1% of Netflix subs had played its games as of a year ago. At 1.7M DAU, that’s the performance I’d expect for a modest mobile game, not a combined portfolio of 40+ titles.
It was easy at first to excuse the early experiments, but as time wears on, what I thought would happen doesn’t seem to be occurring: Buy some studios, link out to a few existing games, let people play for free with a Netflix login, acquire data and learn, and then of course expand into must-have, Netflix-exclusive IP that immerses consumers in the kinds of powerful transmedia experiences that are increasingly becoming prevalent and profitable.
Netflix needs games. Its growth has been slowing, and gaming is a massive opportunity. The company’s 235M users represent less than 1% of the global gaming population, so there’s lots of room to take more of that share. But so far the strategy in gaming has not been one of growth, but one of retention: a deal sweetener for existing subscribers. You watch all the Squid Game you can, get bored, but rather than cancel your sub until the next season, you realize there are some single player mobile games you can play—for free!—with your account.
That’s not enough. And gaming subscriptions are tough businesses for companies that aren’t named Sony or Microsoft. Apple supposedly had 100M users engage with Apple Arcade, but gave out lots of free trials. Google’s Stadia shut down after failing to gain traction. Xbox’s game pass has 25M subscribers paying a minimum of $10/month. Playstation Plus rocks 48M subscribers at $60/year. They’re hard, but they can be huge.
It seems unlikely that a strategy that focuses on “we make Wednesday, and also these games!” is going to be enough to keep users around, and undercuts Netflix’s potential to use gaming as a growth accelerator, both in users and in revenue (gamers have no problem paying more for awesome things). But if it wants to grow, the plan will have to look a lot different than it does now. A strategy that is unique to Netflix. More on this later.
But first, multiplayer is a must
Xbox and Playstation’s offerings work because of a mix of 1) killer app exclusives that lead users to 2) a trove of great, free, monthly-refreshed content and 3) strong social effects. Netflix is already pretty good on 1 and 2 at least when it comes to shows and movies. But people buy these services based on where their friends are.
This last point is a big—and currently untapped—feature for Netflix’s gaming plans and future growth. Right now, Netflix is a solo experience. Sure, we all talk about shows we’re watching and some have become global cultural touchpoints, but the actual act of consumption is limited to who’s on your couch. Netflix’s games, for the most part, are likewise single player.
If Netflix refocuses on some excellent social titles, they open the door to greater engagement (people play Fortnite for a lot longer than they play The Last of Us) and network effects. Suddenly my friend is telling me I’ve got to play this awesome game with her. There’s a lot more social pressure on me than my friend saying, “You’ve got to watch this new Netflix show.” How many times have I jumped on that? The only way I can play it is with a Netflix subscription. Hell, why not: my friend and I want to have fun in this game, but there’s also all this other stuff I can watch once I’m a member. Netflix’s game strategy suddenly flips the script—show up for the game, stay for the shows. A new potential wave of gamers is unlocked.
Interactivity is a must
But multiplayer isn’t enough. I think it’s key for net-new growth beyond just the stem-the-flow-of-subscriber-loss plan it has now, but it’s only the tip of the iceberg of their opportunities. The rest lie in domains that a Playstation or Xbox can’t tap: unique, interactive, transmedia experiences.
Netflix launched its first interactive, choose-your-own-adventure show in 2017, a year before Bandersnatch overshadowed it with mainstream attention. So the company is no stranger to experimental and interactive things. So we’ve got a company that understands that:
unique IP is everything;
interactive experiences like games lead to powerful engagement, retention, and even growth;
gaming subscriptions are hard to pull off without special offerings
Still with me? Why, then, are nearly all of Netflix’s games:
disconnected from its IP
unrelated to the core Netflix experience
pretty unremarkable as far as games go
And I don’t just mean licensed games.
Where are the second-screen experiences, where I can watch Nailed It on the TV while my friend and I run an Overcooked-style kitchen on our phones based on the show’s theme?
What about a multiplayer Stranger Things mystery game that sets you and your teammates on a scavenger hunt that contains easter eggs foreshadowing the upcoming Part II season?
How about a racing game coinciding with a movie about a ragtag team of go-karters where outcomes in the leaderboards actually change the narrative or outcomes in the film?
The platform is forsaking an incredible bi-directional relationship between media and game, scaled through shared, global experiences, that onboards new subscribers through an enticing adventure that only Netflix can provide. They’ve got the IP, the distribution, and the studios. It doesn’t make sense that the game strategy be ho-hum. The platform’s entry to interactive media should be a hotbed of interactive innovation.
I sound frustrated because I am. Gamers are looking around for what’s new, and some of the biggest flashpoints of the past year have been driven by transmedia plays—Hogwarts Legacy, HBO’s The Last of Us, the Super Mario movie. IP licensing is cool, but it’s the base layer of where media and gaming can go, as successful as those examples are. What gets players jazzed, what brings them to the table, what turns them from players into subscribers, are the kinds of unique mechanics and offerings that can’t be found elsewhere and that harness the perks of owning the platform and the content.
Netflix recently announced it was looking into cloud gaming tech. It didn’t work for Stadia, or any of the other cloud gaming companies to date, but perhaps that’s not their plan. Maybe it is to give them the ability to power these kinds of interconnected, real-time interactions between game and show or film. If that’s the case, we could not only have the first meaningful use case of cloud gaming, but also the kinds of awesome shenanigans I hope they’ll bring us.
It’s still early for Netflix in this space, and I imagine they’re still learning. While great games can take years to make, I still expected to see some smaller, experimental stunts at this stage, and at the very least a gaming strategy that felt more Netflix-y rather than a loose collection of unrealted mobile titles. If the company takes a step back to recognize the attributes that are special to its position in the media world, I think they could create one of the most unique and powerful gaming ecosystems. And it would make me a very happy subscriber.