Skip to main content

Netflix Games Hasn't Found Its Big Hit -- Yet

Only a small percentage of Netflix users have downloaded its mobile games so far.

Netflix  (NFLX)  has had a rocky year so far, as anyone watching the streaming giant's stock can tell you.

During its Q1 earnings call, Netflix reported its first major decline in subscribers. And the future didn't look so bright either, as the company also forecast that it would lose 2 million more in Q2.

Investors freaked and Netflix's stock plummeted. But what's telling is that it was already sliding before the announcement. Netflix hit its peak stock price in October 2021 with a high of $690.31. By late January, it had fallen to $384.36, and it's continued to sink since then.

Netflix is obviously at a critical point, and an unfortunate one at that -- after all, it's not every day that a business defines a sector, only to be beaten out of it by its competitors. And now that the streaming market is crammed with rivals, Netflix is forced to figure out how to bring back its business.

One route it chose was to delve into mobile gaming, which was valued at $119 billion in 2021 and is estimated to nearly triple, reaching $338 billion, by 2030. 

There's money to be made there, for sure -- but whether Netflix can find a way to make an impact on the already overcrowded market is an open question.

Netflix Games Lead KL

Netflix Games Is Not Working -- Yet

Since Netflix started its push into games in late 2021, the company has seen them downloaded by 23.3 million members globally and played by 1.7 million daily, per the app-analytics company Apptopia.

While those might seem like big numbers, the active players are actually less than 1% of Netflix's 221 million subscribers. So it's unclear whether its move into gaming so far isn't achieving what the company seemed to be aiming for.

With 24 games available and a total of 50 set to be available in its catalog by the end of the year, Netflix's curation of its mobile library is well-played so far. 

The titles available are a mix of arcade-addictive and story-driven, offering a solid variety for those seeking one or the other. Its most recent releases touch on a little of everything, from award-winning narrative to simple (and fun) Chinese classic mah-jongg.

What Does Netflix Gaming Need to Succeed?

It's admirable that Netflix seems to be building its games library with the same diversity with which it implements in its series and films. But it's an approach very different from the most successful mobile games on the market.

The top revenue driver in the mobile market currently in Tencent Games' "Honor of Kings" (also known as "Arena of Valor" in territories outside China), followed by "Monster Strike," "Puzzle & Dragons," "PUBG Mobile," and "Clash of Clans."

The success of "Honor of Kings" is driven largely by its enormous user base, which was reported as 100 million daily players in 2020. Since the game launched back in 2015, it also has an active e-sports presence, with a World Champion competition scheduled for later this year featuring $10 million in prizes.

For Netflix to really tap into the riches on mobile, it needs to score a game that either has the potential to draw this kind of active player base or create one from scratch. But seeing as its method typically is to cherry-pick great content from other places (such as "Squid Game" from South Korea, for instance), the former is more likely.

But when it comes to what works, Netflix is the first to admit it's still trying to figure that out. Leanne Loombe, Netflix's head of external games, put it into words during a panel at the Tribeca Film Festival this past June.

“We’re still intentionally keeping things a little bit quiet because we’re still learning and experimenting and trying to figure out what things are going to actually resonate with our members, what games people want to play,” Loombe said.