Last week Netflix announced its intention to enter the video game market. The general reaction was best described as “here comes another clueless media company looking to throw money away chasing games.” However, there are signs Netflix may be pursuing a more strategic approach to the game space that is worth watching.

Large media companies going after the video game market tend to look at what is successful and try and copy that success. The problem with video games is that it is a fast-moving industry that requires planning years in advance. By the time a company figures out how to copy yesterday’s hit, the market has moved far beyond.

This has clearly been the problem for subscription and streaming services. The goal is to identify the most popular games and get them on the service. However, even that is not enough as services now need expensive exclusive new titles that offer a competitive advantage.

The challenge is access to even high-end games is ubiquitous. Companies like Google and Amazon have found that developing their own exclusive AAA titles is not a viable option. To compete in the hyper-competitive video game space, new consumer services need to take a different view of games and the game consumer.

The video game market is huge, but it is also diverse and fragmented. The core gamer that spends billions on competitive first-person shooters, high-end PC hardware, a PlayStation 5, etc., is only one segment of a much larger industry. Just like all movies do not need to be Star Wars and all TV shows the Game of Thrones, there are many segments in the game space worth exploring.

There are signs that media companies like Facebook and Netflix are NOT primarily focused on the core gamer segment which tilts heavily towards males age 15 to 35. Instead, they may be looking to game content that not only reaches outside the box but is also a good fit for their existing audience.

As Netflix announced its video game intentions last week, startup Genvid Technologies announced raising $113 million in Series C funding. Genvid specializes in technology for streaming Massive Interactive Live Events aka MILEs.

Basically, the concept of MILEs is that streaming technology allows consumers to take a more active role in games storytelling. Consumers can influence a game in a subtle way without having to participate in a traditional hyper-competitive video game.

An early event using Genvid MILEs technology was Rival Peak on Facebook. Rival Peak was a simulated reality show similar to the CBS hit Survivor. With Rival Peak, millions of users could interact with the AI contestants by helping or hindering them in their progress.

It is not clear, but it seems Netflix may be looking at the MILEs type experience when it talks about incorporating video games into its streaming service. It was interesting that Genvid announced former Netflix VP Original Content Cindy Holland as an advisor. For its part, Netflix has hired former Facebook executive Mike Verdu to drive its gaming push.

Netflix has experimented with interactive content. In 2018 they released Black Mirror: Bandersnatch as part of its popular Black Mirror series. Bandersnatch had simple branching where users could make choices that influence the story.

Genvid MILEs technology allows for much more complex forms of storytelling than what was possible in Bandersnatch. Of course, this type of deep interaction is not what one thinks of when it comes to video games. However, from social network games like Farmville to mobile games in general, the industry has seen huge growth from products that think outside the box.

Right now, little is known about Netflix’s entry into video games. The company has only said it will target mobile platforms first. For its part, Genvid is using its investment to help fund future MILEs, type projects which may or may not end up on services like Netflix and Facebook. There is only speculation at this point.

Observers are right to be skeptical about Netflix’s move into the video game space. However, the industry should definitely not be dismissive as early signs are actually positive. If companies like Netflix can do something different in the space it is worth paying attention to.

The latest DFC forecasts for console game hardware and software are available now.

DFC Intelligence is your go to research partner for video gaming industry analysis. Our studies and Executive Briefs provide top shelf market analysis and forecasts of the video gaming market for customers throughout the video gaming landscape.

Similar Posts