Netflix's Powerhouse Status Now Depends On Gaming

There's no beating around the bush- the streaming space has gotten crowded with many options Roku Inc's ROKU to pick from nowadays besides Netflix NFLX. The Emmy's provided another piece of evidence as The Walt Disney Company's DIS Disney Plus won 71 nominations, AT&T T-owned HBO Max through WarnerMedia won 36, and Apple Inc's AAPL Apple TV 34, and they are all streaming newbies. Netflix accounted for 60% of all streaming nominations last year, but this year dropped to 40%. To avoid losing its mojo, it is expanding into gaming, as its COO Greg Peters revealed during the second-quarter earnings call. It even hired a gaming industry veteran Mike Verdu to ensure it has the right man for the job.

It's All About Content

Besides investing heavily to develop mobile games in-house, Netflix can do the same thing it did when it wrote its streaming success store: it can license existing mobile games to build an attractive offering. This proven strategy move would bolster its initial video game offering, familiarize subscribers with its new gaming platform, and also learn along the way how to support the roll-out of in-house titles.

Sticking To Mobile-Only Gaming

As in every medium, intellectual property stories from the mobile gaming space have both successes and failures. Interestingly, Disney is an example of both. While the entertainment king has developed a few successful mobile games on its own, it pulled the plug on multiple in-house projects in favor of seeking partnerships with outside parties back in 2016. It was a strategic decision based on their performance, and Netflix's definition of a high-performing game will undoubtedly be different because it will have a massive differentiator in free-to-play mobile gaming.

This means it will not be relying on ads and in-app purchases unlike all of its major competitors and by not need to directly monetize its mobile games, it can succeed in areas where even the majestic Disney did not. For this reason, the streaming company's efforts are likely to be lower risk than what its peers had to face.

Avoiding Console And PC Games

It's no secret that major tech companies failed in their pursuit of the console and PC gaming markets that along with smart TVs are categorized as Netflix-compatible devices.

For example, Amazon.com Inc's AMNZ Game Studios' was literally unable to create a single hit game despite flashy industry hires. Alphabet GOOG took hundreds of developers on board to support the growth of its Google Stadia gaming platform with in-house development, only to shortly after deciding to shut down the project entirely, something the search engine is known for.

Obviously, these stories don't necessarily imply that Netflix is doomed but they paint a clear picture when it comes to console and PC gaming challenges. Fortunately for Netflix, it seems to be better suited to develop less complex, lower-budget, and differentiated mobile games from its competitors as it already has its streaming success as a backdrop.

An Ambitious Timeline

Bloomberg estimates Netflix subscribers could be playing games on the platform as soon as next year, according to Bloomberg. Overall, this risky bet on gaming could pay off and it seems like a logical next step for the streaming giant to keep enchanting its massive subscriber base. As long as Netflix sticks to viable strategies and learns from its competitors' mistakes, interactive experiences, mobile gaming, and third-party licensing could be an exciting and successful next chapter of its already extraordinary growth story. After all, gaming has already proven itself as a very fertile entertainment field.

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