Netflix is diving into video games, hoping to increase value for subscribers and reduce cancelations. Offering mobile games at no extra cost gives current members more for their money while potentially attracting new sign-ups.
The move comes as Netflix faces some saturation in the streaming video market. In the second quarter of 2022, Netflix lost 400,000 subscribers in the US and Canada – a concerning sign that growth is slowing in those established markets.
Adding free games to the Netflix app aims to reignite expansion by making the service more appealing. Games provide another form of entertainment that could convince wavering customers to stick around. Attracting new gamers who aren’t yet Netflix members could also resuscitate subscriber growth.
Doubling Down on Data and IP
Two of Netflix’s biggest strengths are its user data and original IP. The company has leveraged these assets to revolutionize the world of streaming video. Now, it hopes to work the same magic in gaming.
User data guides Netflix’s personalized recommendations about what shows and movies you should watch next. This data-driven approach keeps viewers engaged for hour after hour. User data also informs Netflix’s decisions about which new shows and films to produce.
Netflix originals like Stranger Things have become global phenomena, displaying the value of owning your own intellectual property. Fans can’t get enough of Stranger Things and other Netflix hits. This loyal engagement allows the company to exponentially grow its subscriber base.
Games present an opportunity to capitalize further on these competitive advantages. Granular data about user behavior in games, like which characters and storylines they interact with most, can shape the creation of future mobile games. Netflix can then use this data to make its games as compelling as Stranger Things.
The user engagement information gleaned from games may even influence future seasons of Netflix shows. A character who proves popular in a Netflix game could end up with more screen time in an upcoming season of that show.
Expanding the Netflix Ecosystem
Netflix wants to become the definitive online hub for entertainment. The company strives to keep subscribers on its platform for as many hours as possible each day. The more time you spend watching Netflix, the less time you have for rivals like Hulu, Prime Video, or YouTube.
Games present another avenue to soak up free time and keep users glued to the Netflix app. The interactive nature of games allows for deeper engagement than passively watching a TV episode. Fans of a show like The Witcher can explore new storylines and spend more time with favorite characters through related games.
Netflix is also attracted to the cross-promotional potential of games and shows sharing connected worlds and characters.
Imagine if a popular hero from a Netflix fantasy show became a playable character in a multiplayer adventure game. This crossover could drive more viewers to the Netflix show to learn that character’s backstory.
In an ideal future for Netflix, games and shows would form one immersive ecosystem of entertainment IP. Users would seamlessly move between playing games on their phones and watching related shows on their TVs.
A Familiar Playbook
Netflix didn’t invent the idea of delivering TV shows and movies over the internet. But by using data to understand user behavior, Netflix revolutionized the convenience and personalization of streaming video.
Recommending new shows and movies you might enjoy based on your viewing history improved upon the experience of channel surfing or browsing rental store aisles. Netflix’s data-driven approach made it a dominant global force in entertainment.
Now the company hopes to repeat this success story in gaming. Netflix isn’t aiming to challenge console and PC gaming giants like Sony and Microsoft – at least not yet. The initial focus is mobile games meant to augment the appeal of Netflix’s video content.
Revenue and profits from the mobile games launched by Netflix won’t move the needle much for a company earning nearly $30 billion annually. But Netflix is playing the long game. The company sees big potential if it can leverage data and IP to create engaging games over time.
Netflix remains focused on streaming video as its core business. But the company has reached a scale where it believes venture into new forms of digital entertainment can drive incremental growth. After using data to transform television, Netflix is betting it can work similar magic in gaming.
