At the tail end of 2023, we heard rumblings that Netflix was planning on finding a new way to monetize its game library, with some games rumored to be a premium add-on (i.e., you’ll have to pay more to access), while other games could potentially include advertisements. Let’s take a look at these monetization strategies and the drawbacks to each one.
Adding Extra Games As Premium Add-Ons Causes Some Concerns:
Let’s start with a straightforward point: Netflix grew its multi-billion dollar business by offering a profitable streaming service. With Netflix, you don’t pay extra money for select films or television series (although some shows and movies do not appear on Netflix’s ad plan due to licensing agreements). So, why should you have to pay an extra fee for select games on Netflix? It isn’t going to be very easy to explain. But, video games can cost more money and time to develop than a television series or film (though both can, in principle, reach 10’s of millions of dollars or even 100’s of millions of dollars for AAA/blockbusters). Teams of developers are required to get most games to market as most games take years to develop and need millions of dollars in investment for the games to be successful.
The second point is one that concerns digital ownership. Even if you pay more for premium games, with Netflix cloud games, you may not be able to download the games and may have to hope Netflix continues to support your digital game library and allow you to access it. The topic of digital distribution has become a huge sticking point as of right now thanks to a load of rumors around consoles potentially going digital only in the future as well as the announcement Funimation is shutting down and digitally purchased anime libraries will be deleted because of it.
How Could Ads and Micro-transactions Be Implemented?
The next point we need to cover is the way Netflix could implement ads and microtransactions (which I’ve lumped together because they would probably be implemented as a sort of Ying and Yang). With a video game like Subway Surfers, when you die in most cases you have the option to either watch an advert to get another attempt, use an in-game key (which costs real-world money), or let the timer run out and start the run again. Whether or not Netflix would implement micro-transactions remains to be seen, especially as Netflix as of right now does not offer any other in-app purchases. They rely entirely on the basic subscription tiers. Implementing adverts might be fine if Netflix only added them to the ad-supported tier plan. However, they have up until this point marketed their games as not having any in-app purchases or ads. So, I’m not sure how likely this U-turn will be. If it happens, you can be sure they’ll be some un-happy customers.
Could Netflix Increase Prices Or Spinoff The Games Service?
The final option Netflix has is to essentially spin off its gaming service into a separate plan (which would be detrimental to the number of people who would actually play the games). Or, Netflix could do its favorite activity and increase the price of its subscription service. Now, whilst I do think these are probably the two most obvious choices, you also need to factor in that Netflix already has over 260 million paying customers who might cut the service if they keep upping the price. Many of them probably won’t pay extra to access Netflix’s game library.
Final Thoughts:
So how does Netflix better monetize its game library? Well, I personally feel the most likely results will be Netflix adding ads to the video games on the ad-supported subscription tier. I also think Netflix will raise prices to help compensate for the price they are paying to add games. I also think eventually Netflix will offer a tier that would just allow people to access Netflix Games. However, I don’t think Netflix will stop offering some games (perhaps a rotating selection) as part of its subscription service.
What do you think? How do you think Netflix should monetize its games? Let us know on social media.
As always, remember to follow us on our social media. Sites such as X (Twitter), Threads and Facebook to keep up with the latest news.
Advertisement
