Why Netflix’s Initial Push Into Mobile Gaming Is Too Soft to Matter

Why Netflix’s Initial Push Into Mobile Gaming Is Too Soft Matter
Yinchen Niu/VIP+

In January 2019, Netflix indicated in a letter to shareholders that it viewed “Fortnite” as its primary competitor, saying it was losing more viewers to the free-to-play video game than direct competitor HBO (Disney+ hadn’t yet launched).

By November 2021, this sentiment has come full circle after the launch of Netflix mobile games on Android and later iOS, consisting of five titles led by two “Stranger Things” games. As the company’s 2019 shareholder letter makes clear, the distinction between video game and entertainment businesses isn’t material considering they both have the same ultimate goal: commanding audience mindshare.

Upon first glance, tackling the mobile market makes sense, as it’s expected to net $120 billion in 2021, with ads and in-game purchases comprising lucrative revenue streams. But Netflix has opted to keep ads and in-game spending out of its games, simply requiring a standard Netflix subscription to access them.

It’s understandable that Netflix wants to boost the value of its subscriptions given the expansion of streaming competitors over the last two years. But survey data from Hub Entertainment Research's Nov. 2021 “Game Consoles: Respawned and Leveled Up” report shows why Netflix just isn’t utilizing mobile gaming the way it should be.

While Netflix has long shielded subscribers from ads, seeing those isn’t exactly a dealbreaker for the gaming crowd. As many as 72% of U.S. gamers view ads as gaming enhancements when they’re delivered in the form of downloadable add-ons.

This is a big aspect of how games like “Fortnite” earn their keep. In-game items lend themselves well to marketing campaigns for films, TV series or even highbrow music like Radiohead. The rock band’s minotaur character, seen in their “Kid A Mnesia Exhibition” exploration game published by “Fortnite” maker Epic Games in November 2021, was also turned into a limited-time player skin for “Fall Guys,” another property of Epic.

Netflix’s aspiration for streaming subscribers to pivot over to games on their smartphones is also ignorant of how players already access Netflix alongside games.

Hub data shows that after gaming, consumers on console use their systems to access streaming video the most on average, and do so at half the rate they play games there.

If someone is streaming “Squid Game” on Netflix and wants to jump into a competitive game like “Fortnite,” “PUBG” or “Call of Duty: Warzone,” all they have to do is close the Netflix app on their consoles and open up any of those games. Same goes for if they’re accessing Netflix on a laptop or even their phones, where apps for those games (sans updated versions of “Fortnite” on iOS) already exist. 

This doesn’t mean the soft-seeming launch of Netflix games won’t change.

For one, it’s not flying blind, as its VP of game development is a former EA and Oculus exec. And since its initial July announcement of the games push, the company has acquired developer Night School, which made 2016’s “Oxenfree,” a well-received multiplatform title, further expanding Netflix’s potential to spin off games from IP that isn’t “Stranger Things.”

Like, for instance, “Squid Game.” Released in September, the Korean series is the biggest original yet for Netflix, making the global sensation an obvious contender for a mobile title. Beyond the popularity factor, “Squid Game” shares the core premise of battle royale titles like “Fortnite,” which typically involve players competing in various matches alone or in teams to be the last ones standing.

There’s an obvious opportunity here for Netflix, but if the company doesn’t at least incorporate in-game add-ons paid for by players or ad partners, it’ll see such a game go up against the leading competitors without the factors that made such games thrive.

Netflix already publicly ceded one victory to “Fortnite.” Why make itself do so again?