Netflix and Gaming: A Brief History and What’s Next

Netflix and video games have become huge topics of conversation thanks to a number of reports out of outlets such as The Information and Bloomberg. Netflix has long speculated to move into the video game space and to some extent, are already there. What could Netflix and gaming look like going forward? Here’s what we know and what we can speculate going forward.

Before we dive into what the current plans are or could be, let’s take a look back at efforts thus far.

Netflix’s History in Video Games

Before we get into Netflix’s video game attempts after they began creating content back in 2013, we wanted to just mention that Netflix’s Qwikster service used to deliver video games. Netflix DVD still exists of course but they no longer ship video games.

What Video Games Have Netflix Released Thus Far?

Most of the big solo games Netflix has released thus far have come from BonusXP which operates out of Allen in Texas. They released Stranger Things 3: The Game and The Dark Crystal: Age of Resistance Tactics.

Beyond that, the first documented Netflix game involved a mobile runner game that included Marco Polo, Stranger Things, Narcos and Orange is the New Black.

They’re currently working on a “Next-gen AAA original IP PC/Console Game”. That sounds like they’re moving away from adapting Netflix IP.

Most of the gaming content Netflix has been involved with thus far have been with crossovers with established games. That mostly is for Stranger Things and Money Heist content but has been slowly growing over time. Disney and Warner Brothers also cross over with many established games such as both teaming up with Epic Games’s Fortnite with crossovers.

Netflix at E3 2019

For those unaware, E3 is the Electronic Entertainment Expo where industry and fans all congregate (although less so over recent years) to see the latest video games in action.

In 2019, Netflix held a panel looking at their video game slate and recent partnerships. On the panel included Chris Lee (more on Chris in a second), Stephanie Wise who works at The Henson Company (there to promote the new BonusXP The Dark Crystal game), Paul Dichter who writes on Stranger Things and Dave Pottinger who serves as president for BonusXP.

Asked about Netflix’s intention in video games back then, Chris Lee said: “We’ve been working on Original content for some time and we see how passionate the fans are” adding “what we’re looking for is opportunities to extend the universe of these shows and these films into other mediums. To me, it was really obvious to try to do that into video games.”

Going further, he added, “The idea is to take our original series and films and find then find a game developer from the industry who is just as passionate about that content and work closely together with them to bring these things in an authentic way to gamers”.

Before we move on, a quick background on Christopher Lee who has thus far drive the video game efforts at Netflix and holds the title of head of interactive games at Netflix. He has previously worked at both Microsoft and Electronic Arts. He’s been at Netflix since May 2016 although transitioned to his new role in August 2018.

On his LinkedIn profile, he lists some of the projects he’s been involved with:

“Led highly successful partnerships with Epic Games (Fortnite), Ubisoft (Rainbow 6, WatchDogs, & Far Cry), Garena (Free Fire) and Behaviour (Dead by Daylight)
Developing original games based on Netflix IP in collaboration with showrunners, talent and developers”

Interactive titles on Netflix

Beyond just games in the traditional sense, Netflix’s platform also is host to choose-your-own-adventure style content which has very slowly been growing in recent years.

As of July 2021, there are 14 interactive specials on Netflix with the vast majority aimed at younger generations with a few standout highlights including Black Mirror: Bandersnatch which was released in December 2018.

Minecraft: Story Mode is also a standout title in that library given it originally began its life as a video game from Telltale Games which was adapted into a Netflix title.

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What’s Going on with Netflix and Gaming in 2021

Now let’s take a look at the recent developments which seem to suggest Netflix is going to aggressively push into the space much more than it’s done so thus far.

Back in late May 2021, The Information reported that Netflix is seeking a new executive to expand its video game efforts. It was then in mid-July 2021 (roughly one week before Netflix’s Q2 earning results) when Bloomberg reported that Mike Verdue who has worked on Facebook’s Oculus efforts and held served as senior vice president at EA had joined Netflix as Vice President of Game Development.

According to Bloomberg, “the idea is to offer video games on Netflix’s streaming platform within the next year”.

As to what form this will eventually take is anyone’s guess right now.

We do know that Bridgerton is confirmed to be one of the shows to be adapted into a video game. That news came as Shonda Rhimes recently expanded her Netflix deal where a Bridgerton game was mentioned.

Most industry analysts seem to conclude that they’re going to be mobile games initially.

Beyond mobile gaming, Netflix will face quite a few challenges moving into other sectors in the gaming space.

If Netflix is gunning to create an internal in-house game studio, they’ve got a tough mountain to climb. Google and Amazon have both faced failures in the space with Stadia shutting down its game studio before shipping anything and Amazon having faced plenty of struggles with it even having to pull its “boring” game from stores.

The best bet here is to outsource to other studios. We know Netflix is increasingly close to Ubisoft with IP from their library headed in Netflix’s direction, could it move in the other direction?

Beyond relatively simplistic mobile games, Netflix faces issues with other types of games too.

VR and AR experiences will require external hardware which presents a barrier to entry. Top-tier VR sets cost hundreds of dollars whereas mobile VR is still a little clunky. Beyond that, VR gaming as a whole seems to be driven largely by indies and Valve (who releases its own headset) but it’s still argued the technology is on the rise.

If you’re talking about full-fledged games either streamed doing so on a TV remote will not be ideal meaning that there are additional hardware barriers here too.

Rich Greenfield told CNBC that all the media companies are ultimately competing for time and says that gaming has dwarfed video in recent years in terms of usage. He says that Netflix’s move into gaming is a “natural progression”.

Greenfield believes that Netflix will first begin with mobile games and doesn’t envision Netflix creating the next Grand Theft Auto anytime soon.

Others have been more critical about Netflix’s recent announcements in the video game space including Hedgeye Communications Andrew Freedman who on Twitter says this could be pointing towards sub numbers trending down.

All the noise form sell side and press re new monetization initiatives.

Makes me think more and more that sub trends are bad, not getting better and they need a new narrative to sell investors to make up for it/buy time.

— Andrew Freedman, CFA 🦅 (@HedgeyeComm) July 15, 2021

We’ll keep you posted on the new Netflix video game initiatives as and when we learn more.