[Music] hi welcome to another episode of cold fusion when a company faces an existential crisis how could the problem be fixed well they could analyze what's going wrong consider market competition and assess their strengths and weaknesses if done right they might be able to innovate their way out of a sticky situation netflix is sort of in one of those crises at the moment one of their recent solutions was to subtly include gaming in their content offerings so how is it all going for them well the first numbers just dropped earlier this month and well let's
take a look [Music] the last time we talked about netflix we saw how they were losing ip to competitors losing subscribers and being eaten by general market competition these issues have caused no shortages of headaches for the platform towards the end of that episode i mentioned that netflix would have to do something to turn this all around and they decided that gaming content was part of the solution [Music] so how does it all work does netflix let you play titles on your tv with an existing xbox or playstation controller no it's a little more simple
than that essentially netflix is supplying mobile games to their subscribers on both ios and android the netflix app has quietly added a gaming section it features ip from netflix series such as stranger things as well as other mobile games that netflix has brought the rights to [Music] when a user clicks on a game it takes them to the app store or google play to download the game after this you'll be able to play that game within the netflix gaming section or from the home screen the only difference is that you get it ad free there
are currently 26 titles but the company plans for 50 by the end of the year so how is it going so far well according to new analytics data published by cnbc in august of 2022 only 1 of netflix's 221 million subscribers are playing these games that's 23.3 million downloads but only 1.7 million daily users a lot of media outlets are calling this a complete flop but the truth may be a bit more nuanced you see looking from the outside this launch is a bit of a head scratcher it's pretty safe to say that most of
you watching didn't have the faintest clue that netflix was even supplying games the thing is it's been around since november of 2021 but the marketing was non-existent one would think that either they're not confident in what they're doing or that it's a purposeful but woefully quiet launch as it turns out it's the second netflix didn't want consumers to explicitly know about their gaming feature so a figure of one percent of subscribers using the service is to be expected netflix is head of external games greg peters explains the strategy to cnbc quote we're still intentionally keeping
things a little bit quiet because we're still learning and experimenting and trying to figure out what things are going to actually resonate with our members what games people want to play we're open to licensing and accessing large game ip that people would recognize end quote it seems that netflix is just experimenting to monitor human behavior it appears that when they have the data they could manage a much more purposeful launch so far netflix is utilizing outside game developers to build out its gaming catalog but the company has bought three game studios in the past year
and among them is the finnish company next games at a cost of 72 million next games was the studio behind an existing stranger things title so the acquisition was a no-brainer netflix has also reached an agreement with rocket ride games this hints at a future of custom netflix gaming content i spoke to a mobile gaming developer whose company has been contracted to work on some netflix content he gave me a bit of an insider view as to how things are going behind the scenes according to him netflix really seems to be rushing to get things
done they browsed through his company's catalogue and wanted a re-skinned netflix series themed version of an already existing game netflix said that the gaming publisher was not to list the app on the app store and also an anecdote to give you an idea of how fast they want things netflix wanted to launch a new game in a few months despite only approaching my sources team just weeks earlier a netflix representative told him that they're trying to get a mobile platform together and their tech is in flux and not quite figured out properly so it does
seem like a bit of a mess at the moment but we'll see how things go so the question must be asked why gaming well it seems that netflix sees their issues as a matter of user engagement in a letter to shareholders last year netflix named epic games among its biggest rivals for people's attention tiktok and youtube were also on the list a senior analyst at d.a davidson tom forte told cnbc that gaming may be a method of increasing user engagement quote one of the many advantages to netflix in pursuing the strategy is the ability to
drive engagement beyond when the show first comes out on the platform end quote to this statement i don't totally agree at best the games only serve as a proxy for advertising a netflix series the strategy in its current form doesn't do much to keep people using netflix at the moment these netflix games are still available on the home screen after downloading them so users can just launch the game from their home screen without ever visiting the netflix app again the tie between games and the netflix app itself seems a bit weak but in saying that
i'm sure the strategy would probably evolve greatly with time as i was just finishing up this episode some more news broke about netflix gaming efforts according to techcrunch netflix has recently posted job listings that hinted a cloud gaming venture the openings were listed for a security product manager with experience in handling quote cloud gaming challenges and also a rendering engineer who can support netflix's quote cloud gaming service there were also other openings related to cloud gaming so nothing further is known about this and netflix is keeping tight-lipped but this service if it does come to
fruition could be similar to playstation now google stadia or amazon luna so essentially you could play games on your tv without a console it's interesting because my source told me that netflix told him that they were against doing anything outside their ecosystem so tv gaming was likely out of the question but maybe things have changed and if they're going to build their own cloud gaming service from the ground up this would fit their ethos but we just don't know so we're going to have to wait and see what actually happens a million people cancelled their
subscriptions with netflix in the past three months but the streaming giants expected to lose twice the number after years of growth so the company is being hit by a busier marketplace and rising costs so consumers are leaving netflix resulting in its first subscriber net loss in over a decade almost a million subscribers left in the second quarter after a 200 000 subscriber loss in the first quarter gaming could play a small part in helping user engagement but really netflix should focus more on having a reliable catalogue of native content to do this is very difficult
and capitally intensive but the content is what people come to the platform for right now nobody associates netflix with games so to change this brand image is going to take a lot of work and they're going to have to do a lot of things right so what do you guys think do you think netflix can make a successful pivot to gaming in the future or is this just going to turn out to be a large sunken cost let me know your thoughts in the comment section below if you want to see the previous episode on
netflix i'll leave a link to that below also i've been back in the studio recording podcasts again so if you want to check out the latest episode of through the web i'll also leave that below anyway that's about it from me thanks for watching my name is tagogo and you've been watching cold fusion and i'll see you again soon for the next episode cheers guys have a good one [Music] [Music] [Music] cold fusion it's me thinking
