Could Netflix Be About To Move Into Video Games?

Some of Netflix’s recent signings has prompted media speculation that the company is about to enter the video game market, a move that would mean carving a niche in an already crowded field dominated by long-standing companies like Sony, Microsoft, Google, Apple, or Steam. If the academic year hadn’t already ended, the news would have prompted me to prepare a mini-case full of links and inflict it on my students.

Could Netflix succeed in video games by using the same strategies that have led it to dominate televisual content? There are some key similarities between the two: in the same way as a movie or television series, a video game is an entertainment format that users can adjust to their preferences, as happened with the change in consumption patterns that created the phenomenon of binge watching. But contrary to television series, where existing consumption pattern could be subjected to change, people have always consumed video games in widely different ways.

Could Netflix’s recommendation algorithms give it an edge? Gamers tend to be well-informed about new releases and the market, so Netflix would need to offer a much higher number of releases than at present.

Netflix needs new growth: the pandemic took its consumption levels to infinity and beyond, but now finds itself in danger of flat lining, which is completely alien to it, and it needs to find new areas to meet its expectations. Video games or podcasting, an area in which it has also made recent signings, could power growth, but things are not as simple as “build it and they will come.”

Furthermore, the presence of giants who have been working in this area for years and who will not sit on their hands as Netflix moves in for the kill. At the same time, when Netflix moved into the world of video content and streaming series, it had to take on some big beasts, who seemingly could do little as the company lured the best directors and actors away from the major studios and television networks, and who have not only enjoyed global successes, but also boosted their chances of achieving prestigious awards.

Could Netflix now seduce the video game industry by offering a more interesting platform than the existing ones or by offering content creators more substantive revenues thanks to its phenomenal reach? In the world of video games, the studios that create them have as much influence as users: there are a number of cases where development is based on a game’s exclusive availability on a given platform.

What strategies might Netflix employ to enter the complex and important video game market? What areas of innovation can be exploited in this field?

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This post was previously published on Medium.

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