Netflix is reportedly considering ways to generate revenue from its gaming division, signaling a potential shift in strategy for the streaming giant.
Netflix games are free for all subscribers, serving as a way to keep users engaged with the platform and attract new fans. However, discussions within the company suggest this may change, The Wall Street Journal (WSJ) reported Friday (Jan. 5), citing unnamed sources.
Some ideas being considered include introducing in-app purchases, charging for more sophisticated games, or offering access to games with ads for subscribers to its ad-supported tier, according to the report.
Reached by PYMNTS, a Netflix spokesperson declined to comment on the report.
If adopted, the moves would mark a pivot for Netflix, which has resisted incorporating ads or in-app purchases in its games, the report said.
Greg Peters, co-CEO at Netflix, has emphasized the importance of providing a differentiated gaming experience and allowing game creators to focus on player enjoyment without worrying about monetization, per the report.
Peters said during an Oct. 18 earnings call that by building a loyal audience for its games, Netflix can drive engagement and retention for its core business.
The discussions within the company indicate a constant reassessment of the balance between customer experience and the need to generate revenue, according to the WSJ report.
While the number of users downloading Netflix games is still relatively small, the company has made investments in the gaming industry, the report said. It has acquired small gaming studios and created games based on its own shows and movies. Netflix’s most popular original game, “Too Hot to Handle: Love is a Game,” has been downloaded 7 million times since its launch in December 2022.
Netflix’s gaming strategy, which began in 2021, is a long-term bet for the company, per the report. It has spent approximately $1 billion on acquiring gaming studios and building its gaming business. Despite the relatively small number of downloads compared to other game companies, Netflix’s game downloads saw a nearly threefold increase from 2022 to 2023.
The report comes after Amazon and Walmart launched their own efforts to turn games into revenue sources.
Amazon is delving into the development of movies and TV series inspired by the Warhammer 40,000 games, while Walmart has partnered with 3D experience platform Unity to allow game and app creators to link the retailer’s shopping features into their creations.