Streaming gaming is heating up as Netflix and other streaming platforms look to add value and engage this lucrative audience, even as the sector reorganizes and major players like Amazon rethink their approach to streaming video games.
On a Q1 2023 earnings call Tuesday (April 18) Netflix Co-CEO Greg Peters responded to analysts’ questions about the progress of the streaming giant’s video gaming efforts, which Netflix has played close to the vest as it tests what flies and how it can add new subscribers via gaming.
Asked about gaming as it relates to subscriber retention, Peters said, “I’m not going to give you those specific points,” but noted the company has fielded 55 games on the platform to date with 40 more coming later this year. That same day Netflix introduced its “Mighty Quest Rogue Palace” as a mobile game on iOS and Android as part of its output deal with game maker Ubisoft.
Noting that its first new game from an internal studio, “Oxen Free II,” is due out in July, Peters said, “The fundamental goal here is to give our members a new entertainment modality and more ways to enjoy incredible universes and deepen their fandom. We do that with an effort to drive the primary metrics we have on the on the consumer-facing side, which is engagement with the service which leads to retention, and incredible stories that people are talking about games that are must-play games that create buzz off the service and motivate people to sign up.”
While positioning games as an inducement to sign up for the streaming service it’s not currently looking for ways to monetize games themselves, but rather use them as a brand builder.
“The best thing for us to do is really focus on the core initiative, which for us right now is how do we bring games and games based on our IP to our members and fans of that IP directly,” he said. “We want to have a differentiated gaming experience and part of that is giving game creators the ability to think about building games sheerly from the perspective of player enjoyment, and not having to worry about other forms of monetization, whether it be ads or in-game payment.”
Given the strength of Netflix’s ad-supported tiers, streaming gaming is turning into a prime opportunity for brands to reach those audiences through ads on streaming platforms.
Also on Tuesday, LG Ad Solutions released data showing that gamers are more likely to watch free, ad-supported streaming (FAST) than all CTV owners, with nearly two-thirds of gamers spending at least two hours a week streaming via FASTs.
The company found that “gamers subscribe to the most subscription streaming services, at a higher rate than CTV owners, over-indexing on Discovery+, Apple TV+, Peacock, and Paramount+. In terms of how they consume the content, only about 23% stream through their gaming console while the majority (55%) stream through their smart TV apps.”
As streaming services seek ways to bring games into those environments — and new subscribers with them — it’s not a straight line to success.
For example, Amazon continues to struggle in its streaming gaming efforts, announcing in early April that it is culling over 100 employees of its gaming division. In a widely published internal memo to staff, Christoph Hartmann, vice president, Amazon Games, said, “After evaluating our current projects against our long-term goals, the Games leadership made the difficult decision to eliminate just over 100 roles across Primary Gaming, Game Growth and in our San Diego studio, while reassigning some employees to other projects that match our strategic focus.”
However, Hartmann said Amazon is expanding its Montreal-based gaming studio, saying it is “making great progress on their unannounced project,” adding that “the San Diego studio will double down on the pre-production phase of their unannounced game, as that project is not yet ready for a full production size team.”
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