One of the most important words that swirl around the boardroom meetings of Big Tech companies is “eco-system”. Not the biological kind, of course, but the marketing kind. If you wonder why Amazon pays out billions to show a handful of Premier League football games or create a Lord of the Rings television series, it’s not just because they want Prime viewers to be happy – they want people to enter the Amazon eco-system. When the customer’s foot is in the door, then it’s easier to keep them there. So someone who joined Prime TV to catch a Premier League game is more likely to stay in the eco-system, moving towards retail, Amazon Music, Audible, and so on.
Netflix, while holding its own in terms of being a Big Tech player, doesn’t have its own eco-system. You stream movies and television, paying a few bucks a month for the privilege – simple. But the company has always been ambitious, and it was intriguing to see the July announcement that Netflix would be adding video games to its service, most likely next year. The company has hired Mike Verdu, who was formerly of EA and Facebook, so big things are expected. Or at least, they are hoped for.
Beyond this idea of creating an eco-system, you can see some of the logic in Netflix’s move. The company pioneered the idea of binge-watching content and was the de-facto biggest name in the streaming business. But in the last couple of years, we have seen the advent of so-called “Streaming Wars”, with Disney+, HBO Max, Peacock and others representing stiff competition for Netflix. Offering something different, like gaming, looks like a sensible way for Netflix to expand distinguish itself.
Netflix should be enthused by gaming growth
But why gaming? And not, for example, live sports? The latter probably wouldn’t work well on Netflix given its need for advertising revenue to cover the cost of broadcasting deals. But Netflix has surely been dazzled by predictions that the global gaming market is expected to exceed $200 billion by 2023. To underline that fact, Netflix, already a stock market darling, saw its shares rise by just shy of 3% when the announcement broke.
Moreover, Netflix is probably aware that the demographics of gaming is changing. No longer is the target market teenage boys keen to pay fifty dollars for the latest Call of Duty game. The gaming market has exploded in all directions. Mobile gaming, esports, VR/AR, social gaming and gaming streaming have all attracted new audiences.
We might even include online casino gaming in that list, which is expected to have explosive growth in the 2020s. The online casino sector has been buoyed by the opening up of the American market, in particular, after the Supreme Court decision in 2018 allowed for gambling laws to be changed on a state by state basis. But it’s become a global success story, not least because many of the games have evolved in their gameplay to resemble video games.
Gaming and our interactions with gaming are changing
Nevertheless, Netflix clearly sees an opportunity in a world where more people are either playing games or interacting with gaming in some way. With regards to the latter, we mean people watching games as entertainment, and Netflix will surely have noticed the viewing figures for major esports events, or the huge audiences following gamers on sites like Twitch and YouTube.
But before we get ahead of ourselves, it’s worth noting that Netflix has been fairly tight-lipped on what it intends to offer subscribers. We know that it initially will focus on mobile games, but it’s not clear whether its intention is to create a gaming platform to rival the kind of premium content you’d find on a subscription like PlayStation Plus. Regardless, you should not expect to see a huge upheaval until a few years have elapsed.
It is perhaps most interesting to see Netflix talk about interactivity. Back in 2018, the platform released a tie-in game for the show Black Mirror (Bandersnatch). It was described as part video game, part movie. The idea is that players, or viewers, would decide different outcomes for the show. Another tie-in came in 2019 with a Stranger Things game. That release prompted observers to ponder whether Netflix was becoming an interactive platform.
YouTube video player: https://www.youtube.com/embed/29ws5byaevo
And that idea of an “interactive platform” is key here. If Netflix adds some bog-standard mobile games to keep us happy on a train ride, well, great. If it develops a platform where you can play premium games to rival what’s on offer from PlayStation and Xbox, even better. But if its goal is to transform gaming itself, offering interactive experiences blending movies, tv and gaming, then maybe that is something to be truly excited about. We will probably have to wait a while to see what Mike Verdu and his team have up their sleeves, though.
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