Global streaming major Netflix’s gaming foray is one of its longer-term bets. Across streaming, pay TV, film, games and branded advertising, it’s an over $600 billion market, and today Netflix accounts for just ~6% of that revenue. Scaling games, it seems, is a key part of Netflix’s plans to garner more user engagement.
Netflix has launched over 100 games so far and is refining its program to do more of what is working with the 80-plus games that are currently in development.
In September 2023, it launched Netflix Stories — a catalog of interactive fiction games based on hit Netflix series and films. Starting in July 2024, Netflix plans to launch about one new title per month like Emily in Paris and Selling Sunset. Separately, it will premiere a multiplayer game based on the Squid Game universe later this year timed to the launch of season two of its biggest TV series ever.
Updating on its gaming initiative and user engagement and Netflix’s ability to scale its gaming efforts during a Q2 earnings call in July, Gregory K. Peters Co-CEO, President and Director, said, “Games is a big market. It’s almost $150 billion ex China and Russia, and not including ad revenue, which we aren’t participating in, in our current model.”
Netflix is getting close to three years into its gaming initiative. Peters said, “We’re happy with the progress that we’ve seen… We’re looking good in our engagement growth in 2024, and we’ve set even more aggressive growth goals for 2025 and 2026. But it’s worth noting that, that engagement and that impact on our overall business at the current scale, it’s still quite small.”
“And it’s also probably worth noting that the investment level in games relative to our overall content spend is also quite small,” he added, stating that Netflix has calibrated the growth in investment with the growth in the business impact so the streamer is being disciplined about how it scales that.
“The job is to continue to grow that engagement to the place where it has a material impact on the business. I think you’ve seen this trajectory with us before, whether it’s been a new content genre like unscripted or film or maybe getting the content mix right for a particular country, you can think about Japan or India, which we’re now in an amazing place through the hard work of our teams there. We continually iterate. We refine our programming based on the signals we get from our members.”
Peters stated that one of those things that really is working is connecting its members with games based on specific Netflix IP that they love. It is an area that Netflix says its been able to move in quickly in a particular space, which is interactive narrative games as they are easier to build. It places those in a narrative hub called Netflix Stories. Starting in July, Netflix is going to launch about one new title per month into Netflix Stories.
Theodore Sarandos, Co-CEO, President and Director, added, “It’s pretty rare for the new content vertical like this to actually complement or draft off of each other. So every once in a while, we get something like Squid Game: The Challenge following Squid Game, the scripted series. But I think our opportunity here to serve super fandom with games is really fun and remarkable.”
Providing a view into how he sees the Netflix content universe shaping up, Sarandos added, “The idea of being able to take a show and give the superfan a place to be in between seasons and even beyond that, to be able to use the game platform to introduce new characters and new storylines or new plot twist events, now you could do those kind of things and then they can then materialize in the next season or in the sequel to the film. It’s a really great opportunity and a rare one where 1 and 1 equals 3 here. And to kind of replicate some of the success we’ve seen building fandom and with live events and consumer products, this actually fits really nicely into that. So I’m really excited to see where this goes.”