After changing the ways we all watch our content, Netflix (NFLX) – Get Netflix, Inc. Report wants to create exciting new measures to make certain no one ever looks away from their mobile phone ever again.
Netflix has reached an agreement with the Montreal-based RocketRide Games, a self-described “boutique consulting agency for the video game industry,” to bring more games to the streaming service’s mobile platform. There’s no current word on when the games will be delivered, what they will be, or how many more are in the pipeline, but it would seem that this is a long-term deal between the two companies.
This deal follows an agreement from late last year that saw RocketRide deliver the mix-and-match game “Dominoes Café” and the puzzle game “Knittens” to Netflix’s mobile game app, which is free to subscribers and doesn’t include pop-up ads or in-app purchases.
“Everyone at RocketRide Games is extremely proud of this new partnership with Netflix,” said Louis Rene Auclair, RocketRide CEO, in a statement. “Having the ability to bring games to their millions of subscribers is definitely a great opportunity for RocketRide Games and for video games studios all over the world.”
Image Source: Shutterstock.
In November, Netflix launched its mobile games initiative, adding five different titles from three different developers: “Stranger Things: 1984” and “Stranger Things 3: The Game” from (BonusXP), “Shooting Hoops” and “Teeter Up” from (Frosty Pop), and Card Blast from Amuzo & Rogue Games.
The company's recent fourth-quarter earnings call reveals some insight into the decision.
For the most part, executives were “quite pleased with how the quarter played out,” said CFO Spencer Neumann. The streaming company had a strong season, based on the strength of returning seasons of the popular shows “The Witcher” and "La Casa de Papel,” and big splashy hits such as the Korean import “Squid Game” and the social media-driven success of the film “Don't Look Up" and the action thriller "Red Notice."
“So overall, the business was healthy,” Neumann added. “Retention was strong. Churn was down. Viewing was up.”
There was one snag though, and that was, as Neumann said, “we didn't grow acquisition quite as fast as we would have liked to see, and on our large subscriber base, a small change in acquisition can have a pretty big flow-through in paid net adds. And again, our acquisition was growing, just not growing quite as fast as we were perhaps hoping or forecasting.”
The problem here is that, as some have speculated, Netflix may have hit its natural ceiling when it comes to acquiring new subscribers. It got a huge boost during the initial quarantine phase of the pandemic, as people had time on their hands to kill and some hold-outs decided to give the service a chance. But now the so-called “pandemic effect” is starting to wear off for companies such as Netflix and Peloton, as rising inflation is causing people to make tough decisions with regards to their monthly budget.
“Two years ago, we were 10 million above plan, which was a shock, you know? Last year, we were 10 million below or 9 million,” observed Reed Hastings, co-chief executive officer.
Netflix is keeping its core customer base happy and reducing the amount of subscribers who quit (or “churn”) after they’ve watched the series they want to watch, but with a total base of around 222 million people, executives feel they’re not growing as fast as they would like, and they see investment in video games as a way to remedy that.
So far, Netflix hasn’t been too clear on what its investment in games will look like beyond its mobile services. But Hastings noted that the company is taking the the move seriously.
“We've got to please our members by having the absolute best in the category." In a shareholder letter from January 20, the company laid out tentative plans for its future:
"Since launch, we released an additional five games, bringing the total to ten for 2021. It’s still very early days but we’re pleased with our progress. In 2022, we’ll expand our portfolio of games across both casual and core gaming genres as we continue to program a breadth of game types to learn what our members enjoy most."
Valued at over $200 billion, the video game industry is the largest and fastest-growing sector in the entertainment industry, and the success of both the subscriptions series for Sony’s PlayStation and Microsoft’s Xbox shows that its a way to attract loyal customers.
So it makes sense why Netflix might be interested in entering this market to find and retain new customers, but it’s a crowded field. Both Sony (SNE) – Get Sony Corp. Report and Microsoft (MSFT) – Get Microsoft Corporation Report have been been on a buying spree lately, picking up the popular video game companies Bungie and Activision Blizzard, respectively. Even the New York Times scooped up the popular mobile game Wordle “for the low seven figures.” So if Netflix is going to build an attractive catalog, it’s going to have to prepare to move fast and spend big.
Michael Tedder is a breaking news writer for TheStreet.
