From Streaming to Gaming: Will Netflix Win the Gaming Race?
Published on Feb 10, 2022

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With its latest announcement of acquiring Hextech Mayhem, Netflix confirms once again that its venture into the gaming industry is no laughing matter. This proposes the question: does Netflix stand a chance in the face of the already established fierce competition of the gaming sector? Or will it come to dominate the gaming world as it did with streaming?

 

Let us take a step back!


Netflix’s history with gaming is not new. The company started to broadcast videogames in 2018 and officially branched into the gaming industry in September 2021, when it announced its first-ever gaming acquisition of the videogame studio Night School, which turned a number of its famous films and series into videogames. At the time, this acquisition was considered Netflix’s most significant venture since producing its first show in 2013.

 

Is Netflix the only company fighting over the gaming throne?


As mentioned earlier, Netflix has only recently got into the gaming business while others took the move much earlier. Amazon has already acquired its own gaming studio, where it produces cloud gaming services known as Amazon Prime Video. At the same time in 2019, Apple introduced its in-house video games subscription service, Apple Arcade. These three are considered newbies in the gaming sector, unlike other big tech companies such as Tencent, Sony, and Microsoft, which have already established their name in this field. Microsoft has made the world’s biggest company acquisition after buying the American gaming company Activision Blizzard for about USD 70 billion in cash last January; an event that changed the gaming industry and heightened the intensity of competition. The biggest indicator of Microsoft’s ambitions can be found in its official Activision acquisition statement: “Microsoft will become the world’s third-largest gaming company by revenue, behind Tencent and Sony, and will have 30 internal game development studios.”  In addition to these big names, many other companies also intend to join the game.

 

Why is Netflix expected to outperform others in the gaming race?


Since it got into the gaming industry in 2021, Netflix’s subscribers have reached over 210 million. It also reported a profit of USD 1.35 billion for the second quarter of last year alone, nearly doubling that of 2020. The company’s decision to move into the gaming world is probably due to it being one of the largest and most followed sectors that promise significant returns.

What sets Netflix apart from other companies competing in this field is that it already has a massive database of users on its global streaming platform, thus helping it target many users and subscribers when moving into the gaming industry. Additionally, Netflix has some big movies and shows under its belt that can be turned into games as part of its “interactive approach.” In other words, it will give gamers the space to change the course of events in games inspired by its most successful movies and shows, providing them with the freedom to shape the course of events of their favorite shows. Squid Game is one example of a show that Netflix has made good use of and turned into a world-renowned game.

 

Unlike most competitors, Netflix also has potent and fast servers. But some companies such as Google and Facebook rely on streaming too; for that, Netflix plans to create a separate cloud gaming platform in collaboration with industry experts, developers, and designers. Additionally, Netflix is also expected to provide these games for free - at least initially - which means that any subscriber to its existing movies and shows platform will have access to these games for free regardless of the type of subscription.


Where is the gaming industry heading?


The gaming industry experienced a boom in growth after the start of the pandemic, where the gaming market reached about USD 180 billion in 2021. Even with the world being hit with a disaster that caused much suffering, some were still able to profit from this crisis and generate significant revenues due to people spending a lot of money on gaming and streaming during lockdowns. What is even more impressive is the estimates of the gaming sector to grow to USD 200 billion in 2023 - giving businesses looking to make some cash a reason to invest in the gaming industry, hoping for large chunks of their revenues to be generated from gaming services.

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