Netflix is still in the early stages of its video game development, focusing on crawling before moving on to walking and running.

• Netflix is adopting a "crawl, walk, run" strategy for its lesser-known gaming venture, according to Co-CEO Greg Peters.
• Despite the increase in Netflix game options, less than 1% of subscribers play a game daily.
• Netflix is intensifying its efforts to turn popular TV shows into video games and is considering launching a new version of Grand Theft Auto.

Despite Netflix's announcement of its entry into gaming two years ago, subscribers have remained uninterested in the platform's gaming content, as the number of games available has only tripled from 24 to 77 in the past year.

According to Netflix, this is all part of the plan.

Co-CEO Greg Peters stated on the company's prerecorded earnings call that the current trajectory is similar to what they have experienced before. When they launched a new region or new genres, like unscripted, they had to crawl, walk, run, but they see a tremendous amount of opportunity to build a long-term center value of entertainment.

Netflix is expanding into gaming as part of a strategy to secure future revenue streams amid a potentially saturated subscriber base. Additionally, the company is exploring opportunities in sports and retail, both of which are in the early stages of development.

According to Insider Intelligence analyst Ross Benes, the more potential revenue streams Netflix introduces, the more they will have to rely on during future earnings calls when password sharing ends and new subscribers are no longer being added.

In 2021, Netflix declared its commitment to gaming by launching titles as standalone apps for mobile phones. The company stated that games are a way to keep subscribers entertained between seasons of popular shows, such as "Stranger Things," which has been adapted into two games.

In 2021, Netflix has recruited several prominent figures from the gaming industry. Mike Verdu, a former executive at Electronic Arts, joined Netflix as vice president of game development. Joseph Staten, the creative chief for Microsoft's "Halo Infinite," announced in February that he was joining Netflix to work on a new AAA multiplatform game and original IP.

The challenge of getting existing subscribers to download and play mobile games on their phones is significant, as more than three-fourths of all streaming service subscriptions are used on a television screen, according to data from video analytics firm Conviva. This presents a hurdle for Netflix in marketing its mobile game library to its existing subscribers, as customers tend not to use Netflix on their phones.

According to Apptopia, as of September 2023, Netflix's games have been downloaded 70.5 million times globally. An estimated average of 2.2 million users played one or more of Netflix's games per day, with the average daily users peaking at 2.7 million in January 2023 and dipping below 2 million between March and July, hitting a bottom of 1.45 million average daily users in March.

Even though Netflix has 247.15 million subscribers, less than 1% of them play a game on a daily basis, despite the game library having tripled its offerings in the last year.

Netflix has been surpassed in downloads by other mobile gaming publishers, with Playrix, King, and Supercell all achieving significantly higher numbers.

Netflix is testing new games that can be played on any device, including Oxenfree from Night School Studio and Molehew's Mining Adventure, with players using their mobile phones as controllers through the Netflix app on Android and a separate controller-specific app on iOS.

Earlier this year, Peters stated that gaming was following a familiar pattern with new content categories, but he did not provide specific data points.

The absence of any gaming developments from Netflix during its second-quarter earnings conference call earlier this year has sparked speculation that the company may be preparing to abandon its gaming initiatives.

Netflix plans to adapt more of its popular series into mobile games, including Wednesday, Black Mirror, and Squid Game, according to a report by The Wall Street Journal ahead of its third-quarter earnings report. Additionally, the streaming giant is considering a licensing deal to release an iteration of Grand Theft Auto.

During Netflix's pre-recorded third-quarter earnings conference call, gaming was briefly mentioned by Peters, who stated that games engagement has a significant impact on core business metrics, beyond movies and series.

Netflix’s attempt to woo gamers also faces technological hurdles.

Sunny Dhillon, founder of VC firm Kyber Knight, which specializes in gaming and tech investments, stated that he is not optimistic about playing mobile games on a larger screen.

Dhillon stated that the bandwidth and servers being used are hindering gamers, and that successful streaming of multiplayer hardcore games cannot be achieved due to the lags.

Netflix gaming executive Verdu previously stated that Netflix is not seeking to replace consoles.

Verdu stated that the business model is entirely different, and the aim is for it to become a natural way to play games anywhere over time.