🎮Why does Big Tech enter Gaming? (Netflix Games, Apple Arcade, Xbox, Tencent and more)
Ever wondered why the hell is Netflix entering Games? Is Apple Arcade really going to win? Is it the death of Nintendo? Does anyone still care about EA games? Is Tencent Games going to win over the west?
Today we go deep. This will be an exciting one! Get your seat belts on ;) 🕹️🕹️
👾Contents of today’s freemium newsletter:
🔓(1) Why are non-gaming major companies getting into gaming?
🔓(2) Why is Netflix investing in Games and how’s it going for them?
🔒(3) Analysis: Market Share vs. Growth Rate of major gaming players
🔒(3) Prediction: Who’s going to win and who’s going to lose in next 10 years?
🔒(4) Analysis: Who’s winning at becoming a platform vs. becoming publisher?
🔒(5) Career Moves: How to become a Game Product Manager?
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🕹️Why are non-gaming major companies getting into gaming?
Gaming was traditionally dominated by gaming-focused companies like Xbox and Nintendo. But the scene is changing with many platform players like Netflix and Apple are entering this market.
By leveraging their existing platforms and user bases, these companies aim to integrate gaming into their broader entertainment ecosystems, offering a seamless experience that combines video and interactive content.
Customer preferences are shifting towards more integrated and accessible gaming experiences. Consumers increasingly favor platforms that offer a wide range of entertainment options, including gaming, without the need for additional hardware or subscriptions.
This trend is also driven by the convenience of accessing games on multiple devices, such as smartphones, smart TVs, and PCs, and the desire for content that can be easily streamed or downloaded.
It is worth noting and knowing which genre of games is the world playing on each platform?
According to Newzoo’s Global Games Market Report 2023 [13], shooter games were by far the most popular genre on PC capturing more than 14% of all PC gaming genres and this will grow by 5% every year. Comparing this to overall PC market growth of 1.5%, this is massicve.
However, in the console genre, the most popular category is Adventure games mainly due to Zelda: Tears of the Kingdom and God of War Ragnarök.
While in the games genres, the most popular category is Role Playing, and they acocunt for 23% of all movile gaming revenues and mostly popular in market of China, Japan and South Korea.
So what’s in it for companies like Netflix and Apple?
The Global Online Gaming Market Size was Valued at USD 87.22 Billion in 2023 and the Worldwide Online Gaming Market Size is Expected to Reach USD 229.85 Billion by 2033 at CAGR of 10.17% [12]
To tap into this huge market of gaming, both companies made big bets,
Apple Arcade has invested around $500 million into its gaming service, focusing on a wide range of genres to attract diverse audiences.
The platform offers over 200 games, including puzzle, strategy, adventure, simulation, board, card, and sports games.Apple Arcade appears to emphasize family-friendly and casual games, as it provides a safe, ad-free environment suitable for children and families, which is a strong value proposition for parents.
The service is designed to offer high-quality, exclusive content that can be played across Apple devices, making it a mobile-focused offering.
On the other hand, Netflix Games is relatively new to the gaming industry and is focusing its investments on creating games based on its popular shows. Let us understand the Netflix plan deeper here.
👾Why is Netflix investing in Games and how’s it going?
Netflix Games has seen remarkable growth since its inception, with downloads increasing by over 180% year-over-year in 2023. The platform reached 81.2 million downloads worldwide in 2023, driven largely by successful titles such as "Grand Theft Auto: San Andreas," which became the most-downloaded game on the platform.
Netflix entered the gaming market for several strategic reasons. Firstly, the company aims to diversify its revenue streams and reduce reliance on its core streaming business, which faces increasing competition.
By offering games, Netflix can enhance its value proposition and keep subscribers engaged for longer periods, potentially reducing churn.
Secondly, Netflix seeks to leverage its existing intellectual properties by creating games based on popular shows like "Stranger Things" and "The Queen’s Gambit." This strategy not only extends the life of its content but also attracts fans of these shows to explore new, interactive experiences, thereby deepening audience engagement.
Lastly, Netflix is positioning itself to capitalize on the growing mobile gaming market, which is dominated by free-to-play and ad-supported models. By offering ad-free games as part of its subscription, Netflix differentiates itself from competitors and provides a seamless, integrated entertainment experience across different media formats.
Netflix's strategy involves building a diverse gaming portfolio by acquiring game studios and developing games tied to its popular shows, such as "Stranger Things" and "Too Hot to Handle."
The company has also seen success with licensed titles like "SpongeBob: Get Cooking" and the "GTA" series, which collectively made up 17% of its 2023 downloads.
The focus on both original and licensed content allows Netflix to cater to varying tastes and preferences, helping to maintain and grow its subscriber base by offering free access to games.
Looking forward, Netflix is exploring cloud gaming and expanding its internal game development capabilities, with nearly 90 games in development.
The company is also testing gameplay on TVs and personalizing gaming suggestions within its app. However, despite the recent success, Netflix faces challenges in maintaining momentum, as evidenced by the tapering off of daily downloads following the initial surge of the "GTA" releases.
To sustain growth, Netflix may need to focus on regular game releases and ongoing promotion to keep its gaming audience engaged.
🎮Analysis: Growth Rate vs Market Share Analysis
Now let us understand in depth what’s happening: