Netflix became a streaming behemoth largely because traditional TV networks vastly undervalued the content they had. Infamously, Netflix paid a mere $30 million for streaming rights to 2500 TV shows and movies from the Starz catalogue. That is, $30 million for four years … a sum so unthinkably low in today’s market that I just had to double check the numbers. Similar cheap deals were struck with other studios too. This base of content was a huge springboard for Netflix’s streaming initiatives. By the time the incumbent content owners had realised their mistake, Netflix was getting established in the originals space and years ahead of the competition.
Playing in the games space is not going to be as straightforward. ‘Content’ in general is so hot right now and Netflix is the leader. People aren’t going to sell games to Netflix on the cheap. People might not even sell games to Netflix at all. PlayStation Now and Xbox Cloud Gaming are already trying to own this market, and they aren’t sharing their exclusive properties. Netflix does have popular intellectual property in the form of its original TV shows, but the question is whether it can convert viewers into players.
A significant reason why Netflix garnered consumer adoption of streaming is that it had a natural on-ramp to move its existing avid customer base of movie watchers getting DVDs by mail into watching the same movies online instead. The jump from watching TV to playing games is a much bigger chasm to cross. I’m not saying Netflix shouldn’t try to branch out, but I don’t think it is going to take over on the spot. I foresee a slow and gradual expansion.
Distribution is another issue altogether. The App Stores are a roadblock, obviously. You basically can’t offer game streaming on iOS, apart from through Safari. Apple TV lacks a web browser, so there’s no entry point there unless/until Apple’s rules change. A lot of people watch Netflix on their PlayStation and Xbox, but it seems unlikely they are going to welcome Netflix games with open arms, as they all want to push their own game streaming services. The Netflix app is installed on millions of set-top boxes and smart TVs worldwide, and are theoretically powerful enough to display game streams, but only a fraction of those will support pairing things like game controllers.