Analysis: Netflix gets its flirt on with the gaming community

It seems as though Netflix is in stealth mode, eyeing a possible entry into the gaming sphere. According to multiple media reports, Netflix has been on the lookout for an executive to lead an expansion into video games. Moreover, The Information said on 21 May 2021 that Netflix was discussing an option of presenting a bundle of games much like Apple's online subscription platform, Apple Arcade.

A quick search by MARKETING-INTERACTIVE found that prior to this, the streaming platform had already dipped its toes into interactive shows such as "You vs. Wild" and "Black Mirror: Bandersnatch", amongst others. Currently the gaming and esports arena is an extremely expansive space, with a lot of opportunity and potential.  From a content perspective, Netflix has the connections, platform and experience in creating, distributing, and licensing great content.

Leo Tsui, chief business officer at DDB Group Hong Kong, said expanding from being a provider of on-demand movies and shows into a provider of on-demand entertainment can be an organic next step for Netflix. However, there are differences in how content streaming and game streaming operates. "Having the right expertise, investment, and patience in developing it would be crucial. Understanding these factors is important to note when deciding if this is a wise move for Netflix," he said. 

Nonetheless, the core overlap between Netflix and esports lies in content. "If Netflix is contemplating content as an entry point, it would be interesting to see how it integrates its existing expertise into the esports and gaming space," Tsui said. There are already incumbent media platforms that are solely committed to esports, which are produced and managed by experienced event organisers.

“If Netflix as a media platform steps in and adds to the space, it would be a point of interest for many.  Apart from content, obviously in the game streaming space, Google's Stadia offers some good learning moments. As it amongst others such as Apple, Microsoft, or Nvidia further develop the technology and the service models, I'm sure Netflix can take advantage of being the second mouse that gets the cheese," Tsui added. 

With the streaming market becoming saturated, moving into gaming is clearly a way for Netflix to open up an avenue for audience growth and retention. Numerous articles have been written about Netflix’s stagnating subscriber count. On the flip side, the gaming industry has been reporting strong revenue growth, accelerated by the pandemic, which is expected to continue in the years ahead.

Tsui added:

The clock is ticking and for Netflix, there are far more experienced competitors eyeing the same space.

According to a spokesperson from games and esports data company Newzoo, with Netflix's interactive experiences, it has already built significant relationships with top gaming companies. The series for Castlevania, DOTA 2, The Witcher, and soon League of Legends have driven significant interest from each of its player bases. Netflix also licenses its IP out occasionally for games, such as Stranger Things. As such, the streaming giant has already positioned itself as a strategic storytelling partner for video game franchises looking to expand their lore. 

Now, with subscription and cloud gaming services on the rise, Netflix can integrate a line-up of gaming offerings into the same app as its streaming content, easily having one of the largest install bases in the gaming ecosystem.

"Gamers, like many consumers, are stuck in their habits, so making the transition easier can have a huge payoff," Newzoo said. "If Netflix can adapt this technology to gaming, it could be a huge advantage," Newzoo added.

Providing additional services for existing consumers will drive up the time spent on Netflix, and make it much "stickier" as a platform, explained, Tom Simpson, SVP AdColony, APAC.  This bundling effect is similar to Amazon Prime’s idea of combining streaming and eCommerce.

Beyond that, leaning into the fastest growing entertainment category just makes sense.

He explained, Netflix observed as far back as its 2018 earnings report that it competes with (and loses to) Fortnite more than HBO - highlighting its biggest competition for consumer attention is not other streaming platforms, but online games.

Through play, communities come together, to create value and an audience that brands simply cannot dismiss.

"Entering gaming seems an inevitable move for Netflix - I’m just surprised it has taken them this long," Simpson added. 

Possible challenges Netflix might meet with  

Nonetheless, the gaming community is not one that is easily bought over. To really make a mark, Netflix needs to show support for the core community of gamers that made the space what it is today and gain favour and adoption from the developer community, explained Tsui. These developers keep a close eye on who they want to reach regardless of the studio partners or indie developers Netflix has in mind. 

Newzoo said two main pitfalls to look out for are to avoid the lure of self-development and self-publishing, and meeting fan expectation of beloved IP.  With gaming being an exceptionally competitive business, expectations are always high when there is a big company behind them. This spells meeting these expectations as nearly an "impossible task". 

In the past, Netflix has demonstrated a willingness to go against fan wishes in some of its adaptations such as Death Note, The Witcher, Fate: the Winx Saga. To appeal to gamers successfully, Netflix will need to strike the right balance of broad appeal while preserving the spirit of gaming, NewZoo explained.  Newzoo added that hardcore fans are sensitive to how large companies treat their favorite franchises.

"Netflix’s strategy of consistent content releases has been mirrored in successful live-service games but developing a video game is not the same as developing a TV series," warned Newzoo.  

Photo courtesy: 123RF

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