Netflix explains why it enters video games

Netflix has begun sending DVDs to customers by mail. Then he started broadcasting movies and TV shows to others. Then he started making his own movies and TV series. Next: Video games.

On Tuesday, Netflix formally said investors which is in the “early stages of further expansion into games,” saying it’s an extension of experiments the company has done with a handful of interactive style programs of its own choice, such as 2018 Bandersnatch.

It’s a move that is both obvious and surprising, and we can discuss that in a minute. First, here’s how Netflix says it will work:

  • The games will be included for free in Netflix’s main app, and for now will be primarily intended to be played on mobile devices, although they may eventually migrate to TVs.
  • The company thinks some of its games are somehow connected to Netflix’s proprietary franchise – you can definitely imagine a Stranger Things game, though probably not one Sex / Life one – but can also license existing games and brands from other developers.
  • Netflix describes its move into gaming as an initial foray – “We think the time is right to learn more about how our members appreciate gaming,” the company said in its quarterly earnings release – but says although he expects to be in play for the long haul. “This is a fundamental part of our subscription offering,” said Greg Peters, the company’s chief operating officer during the company’s earnings call.
  • The company thinks the main value of its games will be to keep existing subscribers more engaged in the Netflix app, and therefore less likely to unsubscribe. Games could also, in theory, help drive new subscriptions.

If you’ve been paying attention to Netflix over the years, you’ve seen this move coming: Netflix executives, starting with CEO Reed Hastings, have been reflecting for years on the fact that games are a major source of competition for time and the money of Netflix users. More specifically, The information reported earlier this spring that the company was considering offering a package of games to subscribers, similar to those that Apple offers with its Apple Arcade service. And last week Bloomberg reported that Netflix had hired an executive to manage its next gaming service.

On the other hand: If you’ve been paying attention to Netflix over the years, you can still see this as a real departure from the company’s strategy – that is, its insistence on focusing on doing something right.

For years, Netflix executives have been asked when they will get into live sports, or live news, or when they will add advertising to the service. The answer is always the same: Netflix thinks a single focus is the best way to win, and branching out beyond on-demand movies and TV shows would be a distraction.

Now, the company says, it is willing to try something new, while arguing that free games are a reasonable extension of what it already does. The company’s subscription model means “We don’t have to think about ads [in games]. We don’t have to think about in-game purchases or other monetization; we’re not going to think about buying by title, ”Peters said during the earnings call.

Yes, Netflix allows, you really don’t know anything about making and hosting video games. But he says he knew nothing of making his own content when he agreed to do so House of Cards in 2011, and that has worked well since.

But it seems an extension. When Netflix told the story of his first move into original content, he said he thought his customers would like it. House of Cards because he knew his clients like other dark political soap operas. And while Netflix didn’t know anything about doing shows when it started 10 years ago, it didn’t really know that: it only paid David Fincher, Kevin Spacey and production company Media Rights Capital to do the show – and then it did. transmitted to customers in the same way that it has already transmitted to other shows and films it had already had.

But understanding how to make games is a very different set of skills than making TV and movie shows – which is why most big entertainment companies have failed every time they try to get into games themselves. (Big tech companies like Amazon, Apple and Google are all oscillating and failing even to varying degrees.) So it’s entirely possible that Netflix’s move into games could flip.

On the other hand: As even the most hidden executive in Hollywood knows now, the games are bigger than Hollywood, and they do not leave. If it’s going to take a long time to figure out, it’s best to start sooner rather than later.

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