The mobile gaming industry is expected to reach $420+ Billion by 2026 globally.
The video game industry is estimated to be worth $178.73 Billion in 2021, an increase of 14.4% from 2020. By 2025, it is predicted that it will be worth $268 billion.
Big tech companies cannot ignore the gaming industry anymore, and they know this too. Everyone wants a piece of the gaming pie, so Netflix jumping into the foray doesn't come off as a surprise.
The company's co-founder, chairman and co-chief executive officer, Reed Hastings was quoted as saying:
But is that the only reason, or is there something more behind this move? And what kind of impact will it have for indie app developers and studios? Let's explore it in this blog.
Netflix has Shed Nearly $50 Billion in Market Cap After Borderline Catastrophic Forecast Prompting the Company to Venture into Gaming
It was recently revealed that Netflix fell short of its subscriber goals and forecasted a slower growth in the future. And just with that, its market cap lost $50 billion virtually overnight.
Netflix said that it has almost reached its goal of 222 million subscribers by the end of 2021. The keyword here is "almost." Investors didn't like that, their anxiety reached the moon, and Netflix's stock price lost more than $100 in value overnight.
For Netflix, this was like a nightmare come true since July 2012, as its stock price plummeted by about 20% in extended trading after the numbers came out, deepening a steep decline during the past two months. From $508 a share to $400 to further $397.50 by the end of the day.
That's not the only thing that shattered their investor's confidence. Netflix is also providing lower guidance for the first quarter of 2022, forecasting 2.5 million new subscribers compared to 4 million in a similar timeframe last year.
Adding fuel to the fire, Disney and WarnerMedia are giving them fierce competition and adversely impacting their growth.
The pandemic boom is over, and Netflix knows it. To thrive in the future, they have to diversify, and so the company has set its sights on the gaming industry. And, by the way, it isn’t just Netflix who wants to make the most of the gaming business; even Microsoft is looking forward to milking this sector to the T. For example, the company is focusing on Live Service Games or GaaS or never-ending games that have caught the fancy of gamers and tech giants alike.
The Live Service Goldrush
Microsoft's recent acquisition of Activision Blizzard for $68.7 billion has taken the world by storm. It wants to become the Netflix of video games.
The Xbox Game Pass is a gaming subscription from Microsoft and provides unlimited access to over 100 high-quality games and new titles continually added all time. At the current pace, Xbox Game Pass subscriptions are positioned to make approx $4 billion between now and January 2023. It has 25 million subscribers by far
The Xbox Game Pass has sparked the live service gold rush, and it’s only a matter of time before Netflix and others jumped into it too.
How is Netflix Going About with Its Gaming Strategy
Netflix is ramping up its ambition with the acquisition of Night School Studio. They are California-based developers and have a strong reputation for their well-written narrative video games. The studio's founder said that this acquisition would let them stretch their narrative and design aspirations across distinctive original games.
Netflix is known for its support to diverse storytellers, so one can say that the acquisition is a natural pairing. The company also maintains a hands-off policy in its originals, so it's safe to say that it will provide the game development companies with the creative freedom to develop games.
Recently, RocketRide Games and Netflix have partnered on mobile games. The Montreal-based company has signed an agreement to bring more video games to the Netflix platform.
So far, Netflix has lined up thirteen titles, available globally on Android and iOS devices:
- Bowling Ballers
- Shooting Hoops
- Teeter Up
- Asphalt Xtreme
- Stranger Things 1984
- Stranger Things 3
- Card Blast
- Arcanium: Rise of Akhan
- Krispee Street
- Knittens
- Dominoes Cafe
- Wonderputt Forever
- Hextech Mayhem
Games on stranger series show that Netflix is ready to cash on its popular shows. So far, their mobile games have been downloaded more than 8 million times.
(Source: Apptopia)
The acquisition of new game development companies and releasing 13 video games on mobile shows that when it comes to gaming, Netflix means business. In the recent Netflix Q4 2021 earnings interview, Reed Hastings, co-founder and co-chief executive officer of the company, said that he wants Netflix to become the global leader in gaming distribution.
How will Netflix’s Entry In The Video Game Industry Impact Indie App Developers?
After signing the agreement with Netflix, CEO of RocketRide Games, Louis Rene Auclair, said in an interview:
What can we take away from this interview?
- Netflix wants to collaborate with mobile app development companies. If you have an idea for a video game, Netflix is ready to provide the funding for it.
- Netflix has nearly 222 million worldwide subscribers worldwide. By collaborating with Netflix, you will get the chance to tap into these subscribers with your games.
But are these the only benefits for game developers regarding collaborating with Netflix? No
Mobile games are riddled with ads, additional fees, and in-app purchases, pushing many people away. Even developers feel uneasy adding all of these in their games for revenue.
Netflix is providing games with its ongoing subscription plans. The company has promised that their games will have no ads, additional fees, and in-app purchases. So, it's a great opportunity for indie app developers and studios to escape from the predatory monetization schemes that currently plague the industry by collaborating with Netflix.
Another reason to collaborate with Netflix is Metaverse. Gaming is the big attraction for the Metaverse. The company has recently hired former Meta Platforms Oculus executive Mike Verdu as its vice president of game development.
So, if you are interested in exploring Metaverse for gaming in the future, this is another reason to join hands with Netflix.
These are just my predictions. Only time will tell how Netflix's entry affects the indie app developers and studios. Netflix also has ambitions to get into console and PC gaming. Their recent job listing for a tech artist says that the candidate should have shipped three or more console and PC games as an engineer.
Netflix is building its gaming infrastructure. So, it will take some time before we can see the results.
GoodFirms Opinion: It's clear that Netflix is betting big on games. They might face fierce competition from Microsoft and Sony, who are already well-established in this industry. Netflix's commitment to no ads, additional fees, and in-app purchases feels promising. Also, they are known to provide creative freedom based on the originals. Nevertheless, 2022 will unfold how the industry as a whole will gain from Netflix's entry into gaming.
