Netflix ponders over monetizing its gaming business

After introducing ads on its video library, Netflix is now considering ways to make money out of its rapidly expanding gaming business, too.

Games on Netflix for mobiles and tablets have been available for two years. They’re all free and don’t cost extra for subscribers, millions of whom enjoy titles like Grand Theft Auto, Love Is Blind, and Oxenfree.

There are more than 75 mobile games on Netflix. The strategy is to try to keep users coming back to the platform in between their favorite shows as well as to attract a different type of subscriber.

However, just like the streamer recently decided to introduce an ad-bases tier for video content, it now seems Netflix is ready to try to generate more revenue from its gaming branch.

According to The Wall Street Journal, the company has discussed adding in-app purchases to its games, making users pay for more exclusive titles, and, of course, placing ads on games played by subscribers of its ad-based plan.

If water were turned into wine and these ideas were implemented, this would mark a significant pivot for Netflix, which has so far resisted introducing ads or in-app purchases in its games.

“We want to have a differentiated gaming experience, and part of that is giving game creators the ability to think about building games purely from the perspective of player enjoyment and not having to worry about other forms of monetization, whether it be ads or in-game payment,” Netflix co-chief executive Greg Peters told investors in April 2023.

Of course, internal debate about a possible change in strategy doesn’t necessarily mean a decision has already been made. For instance, Netflix was also initially against launching an ad-supported tier and cracking down on password sharing, but it reversed its decision.

Netflix's crackdown on password sharing and adding an ad-based plan was so successful that it likely boosted its subscriber count by about six million in the third quarter of 2023. The streamer even boldly increased prices for its ad-free plans – the premium one now costs $22.99 per month for new US customers.

Nevertheless, even mulling over possibilities to monetize mobile games signifies the need to find a balance between customer experience and money making. Simply having games on offer doesn’t seem to be enough.

Even though the number of users downloading Netflix games is growing, it remains small. As of October 2023, fewer than 1% of Netflix’s global subscribers were daily playing its games, a report by Apptopia said.

It looks like the community expected more. Maybe that’s why, in August, Netflix said it was rolling out a limited beta test to bring gaming to more devices and allow users to use their smartphones as gamepads.

What’s more, in late 2022, job listings betrayed Netflix’s ambitions to build complex and high-profile AAA video games. Projects enjoying the AAA classification usually include major games created by large development teams that command vast amounts of money.

A small number of members in Canada and the UK can already stream games on select TV models, including Samsung Smart TVs, LG TVs, and Amazon Fire TV streaming devices, among others.