Netflix Fancies Future Business With Video Games
Author: Wayne Friedman Source: MediaPost
For Netflix, think video and games, not video and advertising.
Netflix was always assumed to have plans to broaden its business. But many in the TV-centric world now realize the premium on-demand platform didn’t go in the obvious direction.
No TV ad plans for its near 70 million U.S. and 200 million global subscriber base. Regular-looking TV commercials, perhaps pre-roll stuff? Nope.
Netflix thinks the video game market has a growing upside. This shouldn’t come as a surprise. Senior executives have always shared the belief that its main competitor is Fortnite.
No doubt Netflix must see something deep in the crevices of its servers, such as strong consumer data showing that its current TV-video-movie users are more akin to also playing video games, as part of an broader on-demand world.
We know overall digital platform acceptance is strong among young digital users — with entertainment and otherwise. And young consumers have a stronger tendency to play video games. (Aha!)
There are obvious concerns for many. Does this really confirm Netflix's business is slowing down, and that growth in subscribers -- especially in the U.S. -- means some shift in business emphasis?
Globally, not so much. Netflix has 200 million worldwide subscribers. Netflix’s long-term goal is to more than double subscribers, targeting around 500 million.
We can make a lot of assumptions because beyond the hiring of Mike Verdu, previously a Facebook executive working with video game developers, as well as a former EA Sports executive, there isn’t whole lot of details to mull over.
Now analysts wonder whether Netflix will raise prices, and whether current TV-movie users, who will never play a video game, will now worry they might be supporting a piece of the platform they’ll never use.
Well, that could be said about any content — dramas, rom-coms, non-scripted/documentaries. Do Netflix consumers ever ask: Why am I supporting content what I don’t like?
Know this: Netflix likes to keep things simple, an easily accessible product proposition for consumers.
One strong belief is that the video games here will be modeled on free-to-play games. (Maybe Netflix should emphasize the word “free” here.) Some evidence of this comes from Verdu’s background. As head of EA Mobile, he oversaw games such as “Star Wars: Galaxy of Heroes,” “SimCity BuildIt,” “Plants vs. Zombies” and “Sims Free Play.”
So here’s the tangential, out-the-box, kicker to consider: 94% of free-to-play mobile games also carry in-game advertising -- up from 87% in 2018.
Aha! TV-centric, advertising-hopeful analysts take heart!