Netflix Reportedly Considering Adding In-App Purchases and Ads to Its Games

Entertainment Desk

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Netflix is reportedly considering adding in-app purchases and ads to its games in a bid to better monetize its gaming service. According to The Wall Street Journal, the company has had discussions about how to make money from its games for months now, including in-app purchases, putting a price tag on more premium titles, and placing ads on games that subscribers to its ad tier have access to. These methods are common (and effective) in the mobile gaming world, with consumers expected to spend $111.4 billion on mobile games in 2024. Netflix declined to comment to TechCrunch.

A discussion doesn’t always lead to action, so the company may decide to pivot away from monetizing games. Netflix appeared to shut down the idea of ads and in-game payments during an earnings call in April 2023. Plans do change, though. After all, Netflix was initially against launching an ad-supported tier and cracking down on password sharing, yet reversed its decision after losing thousands of subscribers in 2022, marking its first subscriber loss in over a decade.

Netflix’s Potential Shift in Strategy

Netflix games are free for all subscribers, serving as a way to keep users engaged with the platform and attract new fans. However, discussions within the company suggest this may change, The Wall Street Journal (WSJ) reported, citing unnamed sources. Some ideas being considered include introducing in-app purchases, charging for more sophisticated games, or offering access to games with ads for subscribers to its ad-supported tier, according to the report.

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Greg Peters, co-CEO at Netflix, has emphasized the importance of providing a differentiated gaming experience and allowing game creators to focus on player enjoyment without worrying about monetization, per the report. Peters said during an Oct. 18 earnings call that by building a loyal audience for its games, Netflix can drive engagement and retention for its core business.

Netflix’s Long-Term Gaming Strategy

While the number of users downloading Netflix games is still relatively small, the company has made investments in the gaming industry. It has acquired small gaming studios and created games based on its own shows and movies. Netflix’s most popular original game, “Too Hot to Handle: Love is a Game,” has been downloaded 7 million times since its launch in December 2022. Netflix’s gaming strategy, which began in 2021, is a long-term bet for the company, per the report. It has spent approximately $1 billion on acquiring gaming studios and building its gaming business. Despite the relatively small number of downloads compared to other game companies, Netflix’s game downloads saw a nearly threefold increase from 2022 to 2023.

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Netflix’s potential move to monetize games would make sense for the streamer since its growth stagnated at the beginning of 2023, laying off 3% of its workforce as a result. Netflix also recently increased its prices again, with the premium plan now costing $22.99 per month for new U.S. customers. The U.K. Competition and Markets Authority (CMA) reported that AAA games can have development budgets of $200 million or more. Netflix has reportedly discussed charging money for their future high-budget games, WSJ wrote, adding that analysts determined Netflix has spent approximately $1 billion on acquiring gaming studios and overall investing in its gaming business.

FAQs

Q: Will Netflix start charging for its games?
A: Netflix is reportedly considering various monetization methods for its games, including charging for more sophisticated titles and introducing in-app purchases.

Q: What is Netflix’s current gaming strategy?
A: Netflix’s gaming strategy involves offering free games to all subscribers, with a focus on building a loyal audience and driving engagement and retention for its core business.

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Q: How has Netflix’s gaming business performed so far?
A: Despite the relatively small number of downloads compared to other game companies, Netflix’s game downloads saw a nearly threefold increase from 2022 to 2023.

Q: What are the potential implications of Netflix’s move to monetize games?
A: The move to monetize games could help Netflix offset its growth stagnation and increased prices, as well as cover the considerable expenses associated with high-budget games.

Q: How much has Netflix invested in its gaming business?
A: Netflix has reportedly spent approximately $1 billion on acquiring gaming studios and overall investing in its gaming business.

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