Netflix, the world’s leading streaming service, has recently announced that it will be entering the video game industry. This move may come as a surprise to some, but it’s clear that the company has chosen video games as one of its first significant non-video-related business ventures because of two key themes: data and intellectual property.
First and foremost, Netflix has a wealth of data on its users’ viewing habits and preferences. This data can be used to inform the development of video games that will appeal to its subscribers. For example, if a large number of Netflix users enjoy watching fantasy and sci-fi shows, the company may develop games in those genres to attract those viewers.
In addition, Netflix’s entry into the video game industry allows the company to control its own intellectual property. In the past, Netflix has relied on licensed content from other companies to fill its streaming service. However, owning the rights to its own video games will give Netflix more control over its content and allow it to generate additional revenue from game sales and in-game purchases.
Superficially, Netflix will start offering mobile games to subscribers for no additional charge to add value to the service. Subscribers in the U.S. and Canada declined by 400,000 in the second quarter, a sign that the business may be reaching a near-term saturation point. Adding video games may entice new customers while reducing churn.
Furthermore, video games are a natural fit for the streaming platform, as they are often played in short sessions, similar to how people watch TV shows or movies on Netflix. This allows for a seamless integration of video games into the streaming service, making it easy for subscribers to switch between watching a show and playing a game.
However, it should be noted that Netflix will face competition in the gaming industry from well-established players such as Xbox, PlayStation, and Nintendo, as well as newer, digital-only companies such as Roblox and Epic Games. Netflix will have to offer unique and high-quality games to stand out in the crowded market.
In conclusion, Netflix’s entry into the video game industry is a smart move that allows the company to leverage its data and intellectual property to attract new customers and generate additional revenue. While the company will face competition, it’s clear that video games are a natural fit for the streaming platform and could be a valuable addition to the service. It will be interesting to see how Netflix will perform in the gaming industry and how it will impact the future of streaming service.