If Netflix (NASDAQ:NFLX) spent $200 million on a TV series or film and fewer than 10% of subscribers watched it, management could be disappointed. Well, the online streaming platform is betting big on games without seeing any return on its bets just yet.
Approximately 1.7 million users play one of its games on any given day, and its 24 titles have earned 23.3 million total downloads since last November. Even as a percentage, that’s a tiny share of Netflix’s total 220 million users.
The company’s subscriber base has decreased over the last two quarters due to economic uncertainties and greater competition, so management is placing a bet on gaming. So far, though, it hasn’t been a very profitable wager.
Video Games Are Not the Same as Movies or Television.
Netflix already has a leg up on the competition regarding boosting a show’s or movie’s viewership. One of the most powerful digital billboards in the world, it has already captured the attention of 220 million homes across the globe. The Netflix (NASDAQ:NFLX) interface encourages exploration, and the service might suggest popular or otherwise appealing content.
Spending $200 million on a film means less money is needed for promotion than other media conglomerates (although spending more on marketing than it currently may be worthwhile).
On the other hand, the game industry isn’t nearly as streamlined. Netflix (NASDAQ:NFLX) has two difficulties, both of which have to do with the resistance that customers have while being directed to video games.
To begin, it’s unlikely that Netflix (NASDAQ:NFLX) will have much success advertising games to customers of its service on linked TVs or computers. Very few individuals who see a game advertised on TV immediately get it on their mobile devices. This means that Netflix exclusively endorses mobile gaming.
The problem is that mobile devices account for a negligible share of watching. In 2018, the figure stood at 15%; however, with the rise in popularity of connected TV devices, that figure may now be lower.
Second, for iOS customers to access Netflix’s games, the streaming service must send them to the App Store. Android users indeed have easier access to the Netflix app’s game downloads, but the vast majority of people in the globe rely on iOS.
From this perspective, the fact that only 10% of members have downloaded a Netflix game demonstrates the service’s success in accessing the mobile streaming market. Although streaming a new movie is more accessible than downloading a game, Netflix still faces a substantial obstacle in the form of the latter.
How Much of a Return Can We Expect From Netflix’s Games?
Investors want to know whether Netflix’s video gaming offerings are worthwhile. Should it simply stick to what it does best in light of the increasing difficulties in producing a successful game (or maybe I should say in making a game popular)?
So far, it has acquired three independent game developers, the most expensive of which being Next Games for $72 million. There are intentions to increase the current schedule of 24 games to 50 by the end of the year.
It’s safe to assume that the budget is on par with the media conglomerate’s most expensive movies and TV shows. But that sum is still a tiny fraction of Netflix’s (NASDAQ:NFLX) overall expenditure on content. In 2021, the business invested $17 billion in content, and in 2022, that number is expected to be around the same.
Featured Image: Megapixl @Baloon111
Author Shariq Khan 
