Not content with being the leader in subscription streaming video, Netflix is putting significant resources into becoming a major player in video games. But after nearly two years, the company hasn't made much headway in this new market.
Netflix added mobile video games as part of its subscription video service offering in November 2021, hoping to create a stickier service that would keep subscribers engaged. Subscribers can play the games on Android and Apple iOS smartphones and tablets.
Netflix currently offers 67 mobile games that have no advertising, no in-game purchases and no extra fees. The games span such genres as action, adventure, arcade, puzzle, racing, strategy and simulation. Some of them are tie-ins with the company's TV programs, including "Narcos," "Stranger Things," "The Queen's Gambit" and "Vikings: Valhalla." Netflix also has games based on its unscripted TV series "Love Is Blind," "Nailed It!" and "Too Hot to Handle."
Video Games Attract Only A Fraction Of Netflix Subscribers
But gaming is still a small part of Netflix's business. Apptopia, a provider of app data intelligence, estimates that 2.2 million people worldwide play Netflix games on a daily basis — or just 0.9% of Netflix's 238.4 million subscribers as of June 30.
"Even though Netflix is adding new games just about every month, the highest this number has ever hit was 2.7 million and that was in January 2023," Adam Blacker, Apptopia's director of content and communications, told Investors Business Daily.
Also, the actual number of players could be smaller because some percentage could be playing more than one game. The Apptopia data combines players from all of Netflix's games.
This year, the number of players from March to July was below 2 million subscribers. March was the low point for the year with 1.45 million.
Netflix's gaming traffic pales in comparison with those of major mobile game publishers, Apptopia data shows. Playrix, publisher of "Gardenscapes," has 531 million daily active users, while Roblox has 480 million. Further, Activision Blizzard-owned King, publisher of "Candy Crush," has 438 million. Tencent-controlled Supercell, publisher of "Clash of Clans," has 388 million.
Netflix did not respond to a request for comment.
It's Still A 'Developing Business'
Netflix suggests the company is taking a different approach to gaming. When Netflix executives talk about competition, they often point to social media apps like TikTok or video games like "Fortnite" from Epic Games, not just rival video streamers, saying they're battling for the attention of consumers across the broader media landscape.
At the Bank of America Global Media & Entertainment Conference on Sept. 13, Netflix Chief Financial Officer Spencer Neumann said games are still a "developing business" for the company.
"When we launched games we said, 'Hey, this is a long-term growth opportunity for us and it's a giant adjacency,'" he said. "This is something that's a five- to 10-year kind of growth impact."
But Neumann also reaffirmed Netflix's commitment to a successful gaming business, saying, "We're spending in a way that is material but not material to the business yet. This is not a dip our toe in the water and we're going to get out. This is about learning the games (business) for the long term."
Netflix ultimately hopes to move its games to the television and other devices, Neumann said.
Netflix Likely To Keep Experimenting
However, some analysts remain unimpressed with Netflix's push into gaming.
Mobile games, in particular, seem like an odd fit for Netflix, said David Cole, principal analyst for DFC Intelligence, a research firm that tracks digital entertainment.
"Mobile games are such a commodity right now," Cole told IBD. "The number of mobile games is in the hundreds of thousands. So it's really hard to distinguish yourself."
He said Netflix might be using video games to target younger audiences, who watch more video on their smartphones.
"It's a fairly low-risk effort on their part," Cole said. "Still, I don't think it's going to convince anybody to choose Netflix over Hulu, Disney+, Max and others."
Netflix is just dabbling in the video games market now, he said. The unanswered question is whether it will do bigger, more immersive gaming projects that tie into shows in the future.
Wedbush Securities analyst Michael Pachter said Netflix is treating games as a "nice perk" for subscribers.
"They're approaching this without a real strategy," Pachter told IBD. "They're going to have to experiment until they find something that Netflix customers value. They'll noodle around until they figure it out."
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