Netflix to Boost Gaming Investments After Positive Early Results

Netflix Games/GTA San Andreas (Image Credit: Netflix/Rockstar Games)

After years of slow but steady growth, Netflix has confirmed it will "ramp" up its investment in games—though with a careful, calculated approach.

Speaking during the company’s recent earnings call, Netflix Co-CEO Gregory K. Peters said the current budget for gaming is still “quite small” compared to what Netflix spends on movies, TV shows, and sports content. That said, the company is finally ready to step things up. The goal? Add more value to the platform to help attract new users, keep current ones happy, and make the subscription feel even more worth it.

Peters explained that Netflix views gaming much like it did other content experiments in the past. “If we deliver more value to our offering, we get increased user acquisition, we get increased retention, and we get increased willingness to pay,” he noted.

And while Netflix hasn’t gone all-in just yet, there’s already some encouraging momentum. Games like Grand Theft Auto and Squid Game: Unleashed have been popular with players, showing that both licensed titles and in-house projects can work on the platform. Peters said fans can expect more from both categories, along with fresh interactive experiences tailored specifically for Netflix subscribers.

For now, Netflix games are ad-free, microtransaction-free, and included with your regular subscription. But things could change down the line. Peters said the company is open to evolving its monetization model once the gaming platform reaches a bigger scale.

As Netflix’s gaming head Alain Tascan said in GDC earlier this year, Netflix is currently focusing on four types of games: party games, kids’ titles, narrative-driven adventures, and “mainstream” mobile games. These are mainly designed for mobile and smart TVs, with no plans to bring them to consoles like Xbox or PlayStation.

All in all, Netflix seems optimistic about where its gaming journey is headed. Peters wrapped things up by saying the total addressable market for gaming is massive—and Netflix is excited to carve out its own space in it.

Here is the complete statement:

Que:

With your evolving gaming ambitions, including partnerships with Grand Theft Auto and the recently announced Roblox agreement, can you talk to near-term monetization opportunities within gaming?

Ans:

Gregory K. Peters (Co-CEO, President & Director):

"Sure. We look at the near-term monetization opportunity with games very similar to how we've looked at other new content categories. You can think in scripted or film or on and on. And that's essentially, if we deliver more value to our offering, we get increased user acquisition, we get increased retention, we get increased willingness to pay. So it drives all of the sort of core fundamentals of our business. We've seen those positive effects, albeit in a small way relative to the size of our overall business when it comes to members playing games on the service. We already have those positive proof points. And we're going to ramp our investment in this area, which is currently quite small compared to our overall content investment as we ramp the size of those positive effects. So we want to remain disciplined in not investing too far ahead of demonstrating that we know how to translate that investment into value for our members. We've seen good progress, as you know, with licensed games like GTA. We've seen good progress with the games we developed like Squid Game: Unleashed. So you'll see more from us in both of those categories, as well as a whole new set of interactive experiences that we think that we're either in a unique or differential position to deliver. So we're super excited to roll those out over the next year. And then we remain open -- to the core question, remain open evolving our monetization model, but we have got to get to a lot more scale before that becomes a really materially relevant question. So we're going to do that work first. And it's probably worth restating the TAM for this market is very, very large. We remain convicted about our strategic opportunity and excited to make more progress."