Netflix just hired former EA & Oculus exec to make an entry to the war of game streaming, literally “Netflix-of-Gaming”😅. According to its Q2 shareholder letter, it starts to expand into gaming to leverage its original content, such as Stranger Things for the current paid member base, 209m by focusing on mobile-first. That makes a lot of sense. And in hindsight, it’s even an inevitable step for Netflix.
Netflix’s calf, video streaming is maturing. Just check its Q2 result & Q3 forecast, 19% & 16% growths are pretty good for many businesses. But not for Netflix, because it’s much less than previous questers as 24% in Q1. Netflix has to find a new Star & streaming games is almost a perfect adjustment opportunity.
As Netflix brings something new to the table, it’ll make the war of game streaming more interesting. Allow me to share my takes as it’s a long play, a platform play, and how a better Netflix’s play can be.
A long play
In some way, AAA game development is pretty close to filmmaking. Both are capital-intensive content creation industries. Netflix does have a strong arm on filmmaking. While original content IPs are easier to be reused, knowledge & skills may not easily be transferable across the industry. While the time is right to rebuild brand new SW stacks to bring a better game streaming experience to users, it also takes time to build & learn.
For example, Amazon Game Studios(AGS) was founded in 2012. In 9 years, AGS learned a lot from its “big failures” such as: Nova in 2017, Intensity in 2019 & Crucible in 2020. But this August, New World may be different. As its closed beta started in July, it scored 190K player on 07/20 on Steam. As I just checked, it’s no. 4 most played game on Steam, closely behind a big shot: Grand Theft Auto V. This is a long game & Netflix is kind of “late” already.
A platform play
Kudos to AGS to keep playing. More importantly, New World is built on top of an Amazon AAA game engine, Lumberyard. Its source is available in open. In July, AWS also announced Open 3D Engine(O3DE) as a new open-source engine containing the best features and code from Lumberyard. That is how a good platform builder should play. I bet the stack will be very “AWS & streaming friendly”. Psst MS, are you listening? Don’t forget, Amazon also doubles down on Luna & Twitch.
If New World hits big, Amazon’s new fire-wheel may be unstoppable earlier. No worries if not, Amazon can just learn from it & try better for the next one. Here is one simple way to distinguish platform people from product people. Platform people does not focus nor even need to know which product will hit big. Instead, they focus more to have more capable partners are cooking. Because no matter who gets “lucky”, the platform does too.
A Netflix play
So, what could a play Netflix can perform like no other can? Allow me to extrapolate from its shareholder letter. Netflix may not yet direct compete with Amazon head to head for now.
- Create interactivity between the audience & shows, aka +engagement.
- New content to members without additional cost, aka +retention & +new subscription.
- Mobile games first, aka reaching more users & many micro leisure moments.
These indeed aligned better with Netflix’s core business. It creates leeway for Netflix to take a beachhead without too much direct competition.
User participated in storytelling & content creation
Furthermore, there are unique innovations that Netflix is in the best position to push the envelope. For example, Netflix has been the pioneer in using big data to optimize its original content. Or “Giving Viewers What They Want” as NYT put it. With real-time interactive games, Netflix can get more direct feedback & new idea quicker. By providing more audience choices & engagement, the IPs will be more sticky & attached. These are hard problems in popular content creation. But when Netflix successes, its content creation powerhouse may be one generation ahead of others.
Full Disclosure
The opinions stated here are my own, not those of my company. They are mostly extrapolations from public information. I don’t have insider knowledge of those companies, nor a whatever expert.
