Netflix is accelerating its push into video games with plans to double its catalog of offerings by the end of the year, but for now few of the streaming giant’s subscribers are playing.
Since last November, the company has been rolling out the games as a way to keep users engaged between show releases. The games are only available to subscribers, but must be downloaded as separate apps.
The games have been downloaded a total of 23.3 million times and average 1.7 million daily users, according to Apptopia, an app analytics company. That’s less than 1% of Netflix’s 221 million subscribers.
The importance of gaming to Netflix’s overall strategy has arguably increased in recent months as the company faces increasing competition for users’ attention. In the second quarter, Netflix lost nearly a million subscribers, after losing 200,000 subscribers during the first quarter — the first subscriber decline in more than a decade.
In a letter to shareholders last year, Netflix singled out Epic Games and TikTok as among its biggest rivals for people’s time.
“One of the many advantages for Netflix in following the strategy is the ability to drive engagement beyond when the show first comes out on the platform,” said Prosek Partners analyst Tom Forte.
Still, Netflix Chief Operating Officer Greg Peters said last year that the company was “many months and really, frankly, years” learning how games can keep customers on the service.
“We’re going to be experimental and try a bunch of things,” Peters said during the company’s fourth-quarter earnings conference call. “But I would say that the eyes we have on the long-term prize center more on our ability to create properties that are connected to the universes, the characters, the stories that we’re building.”
The company’s current catalog of 24 gaming apps covers a variety of genres and Netflix shows, such as “Stranger Things: 1984.” Several are modeled after popular card games, such as “Mahjong Solitaire” and “Exploding Kittens”.
The catalog will grow to 50 games by the end of the year, including “Queen’s Gambit Chess,” based on the hit Netflix series, according to a company representative.
Intentionally vague
Netflix has been tight-lipped about how it plans to make video games a core part of the company’s strategy, rather than just a side hobby. On the same subject : Netflix is bringing back its Tudum event in September.
“We’re still intentionally keeping things a little quiet because we’re still learning and experimenting and trying to figure out what things are actually going to resonate with our members, what games people want to play,” Leanne Loombe, Netflix’s head of external games, said during a panel at the Tribeca Film Festival in June.
Netflix hinted earlier this year that it will license popular intellectual property for its new game additions.
“We’re open to licensing and getting access to big game IP that people will recognize,” Peters said in January. “And I think you’ll see some of that happen over the next year.”
Netflix used third-party developers for its current catalog, but has acquired three video game developers in the past year.
All this adds up to increasing investment. Netflix has not disclosed how much it spends on developing the video game segment, but the effort is capital-intensive. Netflix’s acquisition of Finnish developer Next Games cost the streamer around $72 million.
Forrester analyst Mike Proulx noted that Netflix has been slow to invest in gaming and that it still appears to be what he would consider “more of a test and an experiment at this stage.” He noted that most people don’t associate Netflix with gaming.
So far, download numbers for Netflix games are far behind the leading mobile games — Subway Surfers, Roblox and Among Us, to name a few — which each have more than 100 million downloads, according to Apptopia. Still, downloads have been slowly rising since May, after a downward trend that started in December.
“We need to delight our members by having the absolute best in class,” Netflix co-CEO and co-founder Reed Hastings said in January. “We have to be different good at it. There’s no point in just being in it.”
