Netflix’s Bold Move Into Gaming: A Strategic Shift or a Step Back?

A few years ago, Netflix took an unexpected leap—venturing into the gaming world. It was new territory for the streaming giant, but with fierce competition and a need to diversify, gaming seemed a promising way to attract and retain users.

Gaming Enters Netflix's Catalogue

Netflix decided to expand its offerings, not just with movies and series but by adding games to its platform at no extra cost to subscribers. Things moved swiftly: Netflix set up its own game studios globally and went on an acquisition spree, buying companies like Finland's Next Games, Texas-based Boss Fight Entertainment, and Seattle’s Spry Fox. They didn't stop at creating games based on their shows like Stranger Things; Netflix also partnered with industry giants like Rockstar Games (the creators of Grand Theft Auto) and Hardlight Studios' Sonic Dash series.

Impressive Growth in Downloads

The initial reception was promising. Netflix games saw over 5 million downloads in 2021, a number that jumped to 28 million in 2022, and by 2023, hit 81 million downloads—a 180% year-over-year growth.

Ambitions for Multiplatform Gaming

Buoyed by this success, Netflix set its sights on a new frontier: creating original, multiplatform games for consoles, computers, and mobile devices. These new games would be independent of Netflix’s existing shows or concepts, aiming to bring fresh, high-quality experiences to a broader audience.

Hitting the Brakes on Team Blue

However, recently, Netflix made a surprising move by shutting down its AAA gaming studio in Southern California, Team Blue, before releasing a single title. This raised questions about Netflix’s commitment to blockbuster game development.

Understanding the Challenge of AAA Game Development

Creating AAA games is a high-stakes investment. These big-budget titles, often associated with top-tier studios, require standout ideas, skilled development teams, and substantial investments in graphics and tech. But success isn’t guaranteed. Games must resonate deeply with players to achieve blockbuster status.

The Grand Theft Auto (GTA) series, for instance, is an industry benchmark, earning over $9 billion from GTA IV and GTA V alone—about 25 times what Rockstar Games spent producing them. Notably, Netflix’s collaboration with GTA was instrumental in its early gaming traction, accounting for roughly 17% of downloads in 2023.

Talent Turnover and Strategic Reassessment

To spearhead its AAA venture, Netflix attracted industry veterans like Chacko Sonny (formerly of Overwatch), Joseph Staten (Microsoft’s Halo), and Rafael Grassetti (art director for God of War). However, with these high-profile departures, Netflix may have reassessed the massive costs and risks involved in building a AAA studio from scratch.

The Content Conundrum Amid Hollywood's Shifts

Adding to these strategic shifts, Netflix is navigating a more cautious content budget. After years of heavy spending, Netflix has allocated $17 billion for new content in 2024, a restrained increase. The Hollywood Writers' Strike has also impacted content production, leading to fewer original shows—around 130 fewer in 2023 than in 2022.

Netflix’s approach may signal a pivot toward creating high-quality content over quantity. This aligns with its decision to stop reporting subscriber growth in 2025, focusing instead on engagement metrics.

Applying a “Less is More” Strategy to Gaming

The recent shutdown of Team Blue may reflect Netflix’s shift to a more measured approach. Rather than pouring resources into original AAA games, Netflix could license popular franchise games, reducing development costs and maintaining player engagement.

Looking Ahead: Netflix’s Next Moves in Gaming

With only about 1% of its subscriber base actively engaging with games, Netflix’s gaming journey is just beginning. Its strategy appears to favor steady, calculated growth over high-stakes gambles. By focusing on engagement and quality, Netflix aims to transform gaming into a core part of its ecosystem—and it may just pay off in the long run.

Netflix isn’t backing down from gaming; it's rethinking its approach. As it continues to explore this evolving space, we’re left to watch—and play—along.