Netflix ventures into cloud gaming amid content shutdown

The news: Global streaming giant Netflix launched a game controller app on iOS and Android, ostensibly to serve as a cloud gaming conduit for its expansion beyond streaming video apps and services.

Why gaming and why now? While rumors have long been stirring about Netflix adding a cloud gaming component to its services, those plans were apparently shelved once the streaming behemoth decided to clamp down on password sharing.

Cloud gaming could increase engagement at a time when new content on the platform is stalled due to the actors and writers strike.

• Offering a game controller, albeit a virtual one on mobile app stores, indicates that Netflix could be looking to test and launch its gaming service soon.
• The company has been acquiring gaming studios such as Night School Studio in 2021 and Finnish mobile game studio Next Games in 2022.
• It has also dabbled in video game-like mechanics in some of its titles, like 2019’s “Black Mirror: Bandersnatch.”

The state of cloud gaming: Revenue from cloud gaming is expected to reach $4.3 billion in 2023, a 62% increase from $2.6 billion in 2022. This is the biggest increase in annual growth to date, per Gambling Insider.

• Despite optimism for cloud gaming, Google shut down its Stadia service in January. That service similarly hinged on a video game controller, but it was a physical one and not an app.
• We forecast that cloud games and streaming will grow the most of any gaming platform by 2025.

Our take: Netflix, which had 220.6 million subscribers worldwide In 2022, per Business of Apps, can pivot into cloud gaming and generate new opportunities for user engagement and in-game advertising without disturbing its core business.

The caveat: More experienced gamers gravitate toward gaming experiences that integrate hardware with software. Netflix is also at the mercy of Apple’s and Google’s app stores for distribution and support of its controller app.