Did you know that Netflix has games? You’re not alone if you answered no: 99% of its subscribers have never experienced the joy of playing Exploding Kittens, Hextech Mayhem, or any other game on the platform.
What happened: Netflix announced its foray into the ~US$93 billion global mobile games market last year as competition with streaming rivals intensified.
- Netflix's bet on games to differentiate it from competitors and bolster its market share, which fell by ten percentage points between 2020 and 2022.
- Despite the limited uptake by users, it is doubling down on the plan, acquiring three gaming studios since 2021 and aiming to have 50 games on its platform this year.
Yes, but: While Netflix may hope a new “Queen’s Gambit” video game will help it checkmate its rivals, the investment comes during an industry slowdown that’s seen gaming companies fall back to Earth from pandemic highs.
- During lockdowns, game sales increased because there was nothing better to do than play Animal Crossing. Now, people are spending money out of the house.
- Major game-makers EA and Nintendo posted disappointing earnings reports last quarter as did some companies that sell gaming hardware like chipmaker Nvidia.
The global games market is expected to grow by 2.1% this year—which is sluggish compared to 24.6% growth seen in 2020. Meanwhile, US game sales are expected to decline for the first time since 2016, per The Wall Street Journal.
Bottom line: The gaming industry is still massive, but the conditions aren’t as favourable as they were even a year ago. If Netflix is looking to level up by tapping into the industry, it’ll have to do so on hard mode.