9 AUG 2023

Why Netflix is right to chase gaming platform expansion?

Even though there is likely not yet a meaningful portion of consumers subscribing to Netflix just for games, the streamer will eventually need more than just TV content, Morning Consult noted in its latest report.

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Nearly two years following Netflix’s push into gaming, the streamer now lets subscribers play nearly 70 mobile games, thanks to additions like “The Queen’s Gambit Chess” and “Sonic Prime Dash” released last month. But even with this growing library, it is still early days yet for Netflix’s foray into gaming, recently evidenced by the minimal mention of games in the streamer’s latest earnings report. Netflix has not gone all out in gaming yet, remaining focused for now on mobile users and regularly releasing casual puzzle-based games not tied to its original intellectual property, Morning Consult noted in its latest report.

Netflix has worked to target a broader set of gamers over the years thanks to an increasing number of ambitious releases (evidenced by the immersive “Laya’s Horizon” and British Academy of Film and Television Arts winner “Before Your Eyes”), but Morning Consult data suggests there is an opportunity for it to take this a step further. In fact, Morning Consult Brand Intelligence data shows that total buzz for Netflix among gamers has consistently been higher than that of the general population. Drilling down to types of gamers, buzz among console gamers was higher than that of mobile gamers in every month between January and July 2023. Total buzz among PC gamers has also been generally higher than that among mobile gamers.

“This suggests an underserved audience of dedicated gamers: those focused on PC and console gaming are more likely to hear about Netflix’s gaming efforts than the mobile-focused ones, but cannot test new titles on their preferred platforms,”  commented Kevin Tran, Senior Media & Entertainment Analyst at Morning Consult.

There have been signs Netflix is considering expanding its games offering to TV sets and PCs, but those plans may be delayed or even abandoned as Hollywood giants prioritize profits in the near term. “Even though there is likely not yet a meaningful portion of consumers subscribing to Netflix just for games, the streamer will eventually need more than just TV content to become less vulnerable to future production stoppages. To win over this new group, Netflix should avoid prolonging a meaningful cross-platform play,”  Tran concluded.

●  MOBILE AND CONSOLE GAMES DOMINATE VIDEO GAME MARKET

While PC-based browser games will lose importance this year, according to a recent Newzoo forecast, titles released for consoles will prove a significant revenue driver next to the revenue champion mobile games. Games published on consoles like Sony’s PlayStation 5, the Nintendo Switch or the Microsoft Xbox Series S and X are also a crucial growth driver.

As Newzoo data suggests, console games will generate revenues of US$56 billion, an increase of 7.4 compared to 2022. This, according to Newzoo analysts, can be explained by delayed big-budget titles finally seeing the light of day in 2023. These include the already-released “Hogwarts Legacy,” “Final Fantasy XVI” and “The Legend of Zelda: Tears of the Kingdom” as well as upcoming titles like “Starfield” and “Spider-Man 2.” Nevertheless, mobile games continue to be the most lucrative segment in the games industry, with a projected revenue of almost US$93 billion, although slow revenue growth may indicate a beginning saturation of the market.

Overall, the gaming industry will see an estimated revenue of US$188 billion with software in 2023, with most of it generated in the Asia-Pacific and North American regions. This makes the video game industry the entertainment sector with the highest revenue potential. In 2021, its estimated earnings were higher than that of movies and recorded music combined.