Netflix to pivot into games as it tries to beat saturation

I am sure you have had your fill of a priest and a rabbi walking into a bar jokes. Today I have something a little different. Have you heard the one where Netflix gets into mobile gaming, competes against Google’s Stadia and Nvidia’s GeForce? Well, it’s not a joke it’s real. Netflix has confirmed that they will be getting into video games and they would be starting with mobile games first.

The time is right to learn more about how our members value games.

…We view gaming as another new content category for us, similar to our expansion into original films, animation and unscripted TV.

..Games will be included in members’ Netflix subscription at no additional cost similar to films and series.

…Initially, we’ll be primarily focused on games for mobile devices

Titbits from Netflix‘s letter to investors on the issue.

It’s not yet clear exactly how this will be implemented but we have answers to some burning questions as shown by the excerpts above. Games will just be an additional section on top of what Netflix already offers. Will it be kind of like GeForce where the heavy lifting is done in the cloud or will this be kind of like Steam Store where you have to download the game to your device?

I am betting on the GeForce Stadia setup here. Most devices that are used for Netflix are not known for their awesome game specs. Leaving the heavy lifting to the cloud would therefore make sense and would simplify things all subscribers would need is to make sure they have a device capable of streaming stuff.

This brings us to our next question. How much is this going to cost us? The line we are being fed is that this will come at no additional cost to us. You are naive if you take this statement at face value. Developing this service is going to cost them money. More money will be required to get the GeForce/Stadia streaming model going. Netflix will pass that on to you.

Maybe not in the beginning as they test out the service and you work as their chimp to perfect the game services and they rake in new subscribers. But later on, they will want a reward for their troubles and it will come in the form of a hike in subscription prices. They may even have a gaming tier depending on how popular the service becomes.

Why is Netflix doing this?

One of the first things they teach you in marketing is that every product no matter what it is goes through a life cycle. There is the research phase when the product is developed and pitched to early investors, the introduction phase when everyone is wondering if this is the next hit or it will turn into a flop, the growth phase when everyone cannot stop singing praises, the saturation phase when you cannot seem to stop disappointing shareholders and potential investors while everyone wonders how it will all end. Sometimes you can pivot and go through some sort of rejuvenation or you can become Yahoo! and die a slow miserable death.

Netflix might still be growing now but its growth has slowed down. All this game stuff is supposed to distract people from the fact that Netflix will only be adding 3.5 million subscribers to their stable instead of the initially promised 5.86 million. Netflix is far from being a Yahoo, pivoting into gaming is meant to prevent them from becoming one.

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