In a recent development, Netflix Inc. NFLX has been reported to be considering revenue-generating strategies for its gaming division. The current games are available to all subscribers without additional charges.
What Happened: As per a recent exclusive by the Wall Street Journal, Netflix’s top executives have been engaging in discussions regarding the potential monetization of its gaming services, sources familiar with the matter said. The proposed strategies include in-app purchases, charging for more sophisticated games, and giving access to games to subscribers of Netflix’s newer ad-supported tier.
These discussions mark a possible shift in Netflix’s strategy, which has previously refrained from incorporating ads or in-app purchases in its games. The company’s Co-Chief Executive, Greg Peters, had previously stated that the focus was on providing a unique gaming experience, unencumbered by monetization concerns, for game creators.
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Some Netflix executives and investors have questioned the strategy of the gaming division, expressing concerns that it may be diverting resources away from the company’s core programming. Despite these concerns, Netflix’s gaming strategy presents a significant opportunity for the company to expand its revenue streams and solidify its position in the gaming industry.
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Why It Matters: Netflix’s potential shift to monetize its gaming division comes on the heels of its entry into the gaming world two years ago. The company aims to build a library of games offering something for everyone, marking another step in its ongoing expansion beyond streaming.
Notwithstanding the small percentage of global subscribers currently playing its games daily, Netflix’s gaming division has shown significant growth, with game downloads increasing nearly threefold from 2022 to 2023. The company’s gaming budget, which is currently a fraction of the budget for other gaming companies, is expected to increase as Netflix moves towards creating console-quality games.
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