Netflix Games has, since its inception, lacked the traditional advertising that mobile games have become known for. However, as reported recently in The Wall Street Journal, Netflix looks as if they are changing their strategy.
So What’s in the Report?
According to that report from The Wall Street Journal (which sources “people familiar with the matter”), Netflix has had internal discussions about how to better monetize Netflix Games – including in-app purchases, premiums for select video games and even adding ads to Netflix Games if you pay for Netflix’s cheaper ad-supported tier. This would be a huge change, especially as Netflix has promoted the fact that their games are ad-free as a selling point for the service. However, this next point might put this into a little better perspective.
Video Games is an Expensive Business
Now, this point is recognized by both gamers and developers alike: the cost of developing video games has increased over the years. So, for a company like Netflix (which tends to have smaller margins than other FAANG companies) to continue to develop their gaming arm, they’ll need to find a new way to monetize that makes sense for the business. Am I in favor of Netflix adding in-app purchases or ads to their games? Not really… But, when you calculate the potential costs of a hosting a cloud gaming service, developing a wide slate of in-house games as well as paying companies like Devolver Digital, Rockstar Games and Sega to bring third-party titles to Netflix, you can start to see why making the games division profitable is of high importance for Netflix.
If Netflix does end-up adding in-app purchases and/or ads, I hope they don’t do it in a predatory manner like we’ve seen from other publishers at times in the past (EA and Activision come to mind) have done in the past. We will see if Netflix goes down that path.
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