Netflix’s gaming debut may just provide the much-needed boost for cloud gaming
In the year 2000, Blockbuster, the then one-stop shop for all your video needs would make a fatal business error that would haunt them for ages to come. They had the option to buy Netflix for $50 Million and all they did was laugh at that prospect.
The rest is history.
Today Netflix is the market leader in streaming services. While Amazon, HBO Max, Hulu, and Disney+ are amongst the top contenders, the throne is undisputedly Netflix’s to lose. But Netflix isn’t going to pull a ‘Blockbuster’. It’s wary and eyeing the next target — Gaming.
The Gaming Gold Mine
It’s not just Netflix, but players like Apple are also plotting to break into the insanely profitable video gaming industry, while Google has already taken the first step with Stadia. These Tech giants aren’t messing around because they see a potential gold mine in the gaming industry with the US gaming Industry alone raking in more than $90 Billion in revenue in 2021!
The gaming industry has been here for a while, but Netflix’s sudden interest to enter the space has certainly raised many eyebrows. As with anything else, this is a well-thought business decision, owing to the prospect of cloud gaming.
Being a leader in cloud-based content streaming service, Netflix is well versed with the infrastructure and deploy this technique into gaming. Mobile is their priority, which makes sense considering they are testing the waters. The priority can be to push existing users to spend more time on Netflix.
They’ve already brought in Mike Verdu to oversee gaming, who boasts a pedigree of history in mobile gaming having previously worked in Facebook, Electronics Arts, and Oculus.
This tells us Netflix is serious about making strides in the gaming field.
Why mobile of all things?
Mobile users spent a total of $100 billion on mobile games in 2020.
On top of that, Netflix has a significant number of viewers on Mobile. It’s brilliantly looking to monetize the seamless experience proposition.
What’s the business model?
Netflix will introduce ad-free mobile games without any extra cost for existing subscribers.
You think that’s a bad idea? We think being Netflix is smart here.
We all know what happened with Stadia. While it may not be christened a total dud, it didn’t achieve ‘the next best thing’ status, nor did it made a dent in the consoles/pc community or disrupt the gaming industry.
Factors such as the distance of data centers from the players being an issue causing input delay in games, and a per-game cost over the existing subscription cost complicated Stadia’s performance in the market.
But one more issue for Stadia was — they didn’t have a robust USP.
This is where Netflix has an ace up its sleeve.
Unlike Stadia, Netflix isn’t going head-to-head against gaming titans like Sony and Microsoft. The mobile gaming space is not as saturated and Netflix has something that a lot of game studios don’t have.
Content.
With more than a handful of originals like Stranger Things, Money Heist, and Ozark, Netflix might be looking to develop these series into games without the headache of having to create a new IP albeit with all the perks of owning one.
This could mean exclusives similar to Sony’s Spiderman and God of War, without the headache of developing gaming hardware, at least so for the foreseeable future. With a gaming veteran like Mike Verdu by their side, Netflix on paper looks like it has covered all grounds for its gaming debut.
Netflix isn’t putting all its eggs in one basket. They aren’t looking at disruption, rather they are testing waters with a sure shot strategy i.e., mobile.
To provide some context, Netflix has reached a saturation point with its subscribers. Every major player in the television and broadcast field is now venturing into the streaming business and/or has a plan. This may mean a different thing for the end-user, but for Netflix, the first-mover advantage has outlived its perk.
By offering value addition to the current customers, Netflix can cling on to its 200 Million plus subscriber base, but also milk its IPs like Stranger Things, which may not only stop users from eventually canceling their membership, but also play an instrumental role in signing up new customers.
Netflix is targeting the casual-Gamer crowd
Google’s gravest error was positioning Stadia as the next best thing, in the demography of hardware-loving hardcore gamer base of PC and Console players at the time. This may have worked or at least set the groundwork to establish Stadia as the cloud gaming pioneer, if Google had partnered with major studios to develop exclusive titles, or offered more feasible pricing for the Stadia model.
Netflix, with the decision to go mobile-only for now, has instead chosen a different approach altogether. The casual gamer crowd isn’t highly saturated, particularly the mobile crowd. Netflix doesn’t have a lot of expectations to meet here, but has the right tools by its side to make the right first step with a solid impact.
Insanely successful IPs like stranger things have a large fanbase, meaning a mobile game based on it will not need a lot of marketing as the hype creates itself, while Netflix laughs its way to the bank.
The Freemium model seems to be Netflix’s trump card
Offering a game at no extra cost for subscribers, and an ad-free experience makes Netflix look like a saint in the gaming industry where vicious and predatory monetary practices are the norm.
However, Netflix seems to eye the Freemium model used by various mobile games.
Charging for cosmetic upgrades, and unique items, in the form of in-app purchases will do wonders for Netflix.
Netflix may even offer the freemium model to attract new users and then use microtransactions or urge them to buy memberships to enjoy full benefits.
Pay to win is a common model used in games like GTA Online, which has made astronomical profits for Rockstar and Take-Two. Rockstar was generous enough to offer GTA 5 for free in Epic Game Store, all because a new wave of the online player base is guaranteed to be instrumental in the sales of shark cards, Rockstars in-game currency for GTA Online.
Netflix will also most likely focus on the live service gaming model, where content is drip fed eventually instead of one complete game. Since the shows are released by season, there is no reason this shouldn’t work for the games.
Cloud gaming should be Netflix fort(e)
All said and done, if Netflix aims to be a landmark name in the gaming industry, and plans to sustain in the long run amongst the vicious competition, it has to tread the path that is least explored.
Stadia’s lukewarm response shouldn’t be a deterrent by any means. Cloud gaming is a lucrative piece of the pie in the gaming industry that will soon be the gamechanger.
Games have rapidly undergone a technological digital revolution, from cartridges to DVDs/Blu-ray Discs, and now the digital store download. Valve is the market leader and is the number one digital store choice for gamers. Even Microsoft saw a tremendous amount of success with its Xbox game pass, and so did Sony with the PlayStation store. No more queueing up in front of stores a week before the next GTA release!!
The semiconductor shortage brought upon by the pandemic has also made hardware, be it PC parts or consoles like PlayStation 5 dearer and a factor that isn’t in the control of the end-user. This is the gamer equivalent of GameStop running out of game discs.
Netflix can target the console and PC market with cloud gaming offering, since there’s already a hardware draught brought upon by the pandemic and it’s anybody’s guess as to when the showers of hardware stock will grace us. This potential market can work wonders for Netflix.
‘Convenience’ & ‘plug-and-play’ are keywords for Netflix. Penetrating cloud gaming with a USP like Netflix would be a pipe dream for many, which Netflix can make in the blink of the eye.
With servers around the world, Netflix has already covered some ground. Exclusive titles — another advantage. The biggest challenge Netflix faces is the issue of input delay. Response times are crucial in many games and input delay is the game-breaking fly in the ointment. Address that, and not only is Netflix good to go, but it is also ready to give some big studios a run for their money.
Imagine sitting on your couch, switching on your TV, and playing games. No hardware requirements, no Graphic card crisis, no bricking of your console!
Consoles are halfway there, offering the couch gaming option, but what if your friend doesn’t own a console and is on mobile? Cross-platform play between mobile and TV without a hardware handicap. How’s that for USP!
The cloud race is Netflix’s to lose
Currently, Netflix only intends to explore the mobile gaming space. But the sooner Netflix enters the cloud gaming space and targets non-mobile gamers, the higher its chances of shaping up the space. Microsoft has already tasted success with its Xbox game pass raking more than 18 million subscribers.
Netflix doesn’t even need to invest in the hardware, simply entering the domain with its robust userbase will force the hand of many studios to follow suit and compensate and create the supporting infrastructure needed to establish the domain.
On top of it, end-users don’t carry the burden of investing in hundreds and thousands of dollars’ worth of hardware to play games at a respectable resolution and smooth graphical settings. All it takes is a Netflix subscription.
Gaming Studios can even collaborate with Netflix to be the exclusive store for their title’s release. The possibilities are infinite here. And what’s interesting here is there are enough slices of pie for everyone involved.
PCs with high-end hardware, consoles can co-exist with cloud gaming. The purists surely won’t abandon ship and transition into cloud gaming aficionados. But the non-gamer, casual-gamer, and occasional gamer will not think twice about getting a subscription to play a library of games without having to dump a ridiculous amount of money for gaming hardware.
Cloud gaming will remove the hardware paywall and provide the players a unique gaming experience for a fraction of the cost while being highly remote and convenient! You don’t need to have a deep wallet to be a gamer anymore!
The technology is there, a large part of the population is tech-savvy and adopts new trends like there’s no tomorrow. This is the time for studios/developers and large players in the industry to collaborate and set up the next milestone in gaming!
