Ronen Menipaz

Gaming Is Helping Netflix Win the Streaming Platform Competition for Viewership

In the past year, Netflix has been in turbulent waters as more competitors emerge and threaten its stronghold over streaming services. The streaming giant faces volatility in the number of subscribers and competitors in the market. This pressure from new players such as Disney+ and HBO called for a change of strategy for the entertainment giant – offering customers affordable subscription plans with ads thrown into the mix.

But its entry into the gaming industry will undoubtedly change the picture.

Netflix and gaming?

Yes. Netflix made its foray into the gaming industry in 2021. Through purchasing and developing titles exclusive to their streaming platform, they are able to provide an immersive experience that connects users even more widely with content from their platform.

In addition, in this process, Netflix caters to gaming enthusiasts. This industry has approximately 3.2 billion players from all over the world, putting the gaming companies’ revenues at more than 180 billion dollars in 2022, according to Newzoo.

Netflix has published some 35 games and achieved 34.1 million downloads since its entry into the gaming industry, with 16% of these coming from US users alone. Apptopia reports that 1.63 million people are actively playing their titles – a minuscule number compared to their total record-breaking user base of 223.1 million subscribers worldwide.

Despite this small start, by laying down foundations now, they could be in line for some huge rewards later on as demand increases globally.

The strategy: bringing together world-renowned game developers

As part of their strategic advances of laying the foundations and building infrastructure, Netflix has begun to gather many renowned game developers over the last two years. In September 2021, it announced the purchase of the game studio Night School, which is responsible, among other things, for the development of the game OXENFREE, and in March it purchased the Finnish Next Games, which is responsible for the development of the games Stranger Things and Walking Dead, for $72 million.

This was all happening at the same time as they founded a game development studio in California led by Chacko Sony, who oversaw the production of God of War: Ascension and was the executive producer of Overwatch. The idea is to produce several series based on popular games and thus bring gamers to its screen.

Netflix’s strategy is to take advantage of the huge community created around its hit series, which some even say have developed their own universe, and try to turn them into an even bigger brand. This means selling merchandise and developing games that will make it possible to extend the life of the series–similar to their big competitor Disney, which did it with Toy Story or The Lion King, which are products that have lived on for over 20 years.

Now we are witnessing a streaming war developing between these two giants, as Disney slowly manages to strengthen its grip in the series and movies world with a consistent increase in its streaming subscribers, which is approaching 165 million, according to Disney and Statista.

On the other hand, behind the development of a mobile, computer or TV game stands data science–together with an approach that looks from the deep side of the user. Netflix is trying to recruit experts with experience for the new adventure to avoid the same mistakes their competitors made in the past. Amazon and Google have experienced failures for many years until they managed to find the winning horse.

For example, as an entrepreneur in the world of gaming, I had the opportunity to look and test different approaches to building games, in order to produce a special experience. When it comes to a platform like Netflix, the combination of content such as series and movies into the gaming experience creates something new.

Development of Games Based on Successful Series: The Super Entertainment Strategy

Netflix’s move is smart and logical. Developing fun and light games, among other things, based on the most loved and watched series allows it to produce a deeper value chain. And also to strengthen the brand and the sympathy for the hits that conquered the world. It’s brilliant, and adds to increased profits, and allows them to turn to a new sector full of potential.

Unlike in the past, a game’s development cost is minimal compared to a high-budget series’s production. The game allows a significant source of profit and revenue. Today it is possible to develop a computer game, even at the expense of only tens of thousands of dollars, during which its economic viability far exceeds the production of a series as well as the risk that accompanies it.

Sometimes, we forget that at the end of the day, Netflix’s streaming services are an app – and when you think about it that way, the focus on games doesn’t sound so out of place on the part of the content giant. Almost always, the time people will spend on a specific game will be more compared to most of the existing apps. Netflix understands this and decides to take its strategy a few steps further.

You have to understand that more and more people choose to spend their free time with a mobile game, as opposed to binge-watching series. Let’s do a simple experiment. Go to the screen time area on your phone, which shows a segmentation of the amount of time you spend in front of the various apps.

I bet that at the top of the list, right after social networks, WhatsApp, and emails, this or that game will be given a place of honor. If that isn’t the case? You are probably not from the Y or Z generation.

And when you think about it like that, Netflix’s focus on games doesn’t seem so unreasonable. In most cases, the time people spend on a specific game will be greater compared to most of the existing apps. Netflix understands this and decides to take this strategy a few steps further.

In a world where the technology giants compete with each other for our attention, Netflix, Disney and HBO try to be where our attention is. At the same time, they also understand that the future of the entertainment industry is in gaming. Games succeed in producing a peripheral and continuous experience that keeps the users engaged. Netflix understands that by approaching things this way, it also wins the most important playing field – the one for the user’s time.

It’s all about getting to the next level.

About the Author
Ronen Menipaz is an Israeli investor, entrepreneur, tech advisor, and founder of numerous business ventures in the entertainment, adtech, and fintech space, as well as the co-host of the Real Life Superpowers podcast. During his 25 years of entrepreneurial experience, Ronen has been involved with over 100 startups in Israel, 30 of which he founded or co-founded. Two of those startups went public, while five were sold and four more are currently privately profitable companies.
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