Netflix is getting into a gaming. The company's new second-quarter shareholders letter seems to confirm reports from last week that the streaming giant is expanding into more interactive entertainment by providing the first real details about it's gaming strategy.
In the letter, released before is Q2 earnings report on Tuesday, Netflix explains that gaming will become a new content category for the service, alongside it's movies, TV series, and reality programming. Netflix's games will focus on mobile devices initially and will be included in the subscription price, like all the services other content, and will mostly be focused on existing Netflix IP. The games will also not have in-game purchases, according to Netflix COO Greg Peters.
It's worth noting that while this was surely in the works for a while, this move comes at an interesting time for Netflix. Last quarter, the streaming service missed it's expected growth numbers, citing a weak slate of content as one of the primary reasons. Meanwhile, I'm Tuesday earnings report, Netflix reports that it lost 400 000 subscribers in the US and Canada this quarter. This is the first time it lost subscribers in the region since Q2 2019, though it has gained 7.5 million subscribers in the two countries since then.
While it remains to be seen whether or not Netflix can tap into the mobile gaming market, it's already clear that its members value games quite highly. In fact, in an earning letter from 2019, Netflix said that the streaming services main competition wasn't network's like HBO but rather video games like Fortnite. Tuesdays earning letter offers a similar statement, stating that Netflix is competing for screen time with "firms like YouTube, Epic Games, and TikTok ( to name just a few). But, mostly we are competing with ourselves."
According to the study from the NPD, mobile platforms are the most popular in the world at the moment, particularly after a huge growth in the US and Canada during 2020. And that's even more compelling for other regions. Netflix's earning letter says that Asia and the Pacific (APAC) represent two - thirds of it's growth in the last quarter. These are regions where mobile gaming is extremely popular, such as in countries like India.
Whatever the larger reasons behind it, Netflix's foray into gaming is a way for the company to reach beyond it's current original programming. Of course, with the experiment only just starting, it could be just a few years before we, and Netflix, see whether it's games while be successful.
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