With Netflix in the game, we’re doomed
Tech giant aims to fill all waking hours with screens in video game venture
Big corporations, especially the truly successful ones, are always thinking about their competition. Samsung always has Apple on its mind. So, too, does Google, but it also has Microsoft and Amazon forever in its crosshairs.
But Netflix, beyond just the looming presence of Disney, famously has another foe in its sights: sleep.
In 2017, CEO Reed Hastings suggested that the company is competing against anything that might otherwise occupy a consumer’s time: games, sports — even slumber.
Perhaps that’s why the company is now moving into video games. During its Q2 2021 earnings call, Netflix announced that it had hired its first gaming VP.
For watchers of the streaming giant, it doesn’t come as a complete surprise.
But for those unfamiliar with gaming, it also seems like a highly fraught endeavour — a move that not only carries a high risk of failing, but also reveals the trouble with the global scale of tech companies.
Netflix’s reasons for broaching the world of gaming are obvious. Subscriber growth is slipping internationally, and in its most important markets of the U.S. and Canada, it is losing customers. Gaming thus offers a growth opportunity.
Beyond that, Netflix has an obvious advantage in its existing streaming infrastructure and know-how. Gaming is undergoing a shift analogous to video: Instead of physical games or downloads that one owns, there is a trend toward streaming things across the web.
Given the kind of hair-trigger reaction times games require, new kinds of technical capacity are required, and as one of the world’s biggest users of internet bandwidth, Netflix has a head start.
Couple that with the company’s brand recognition and global reach, and there is a certain strategic sense to the proposed expansion.
Yet even bigger companies have fallen flat on their faces after trying to make it in gaming.
Google had grand ambitions with its Stadia streaming service, but this year cancelled plans to make its own titles, and has drastically reduced hiring for gaming, mostly because it simply hasn’t made anything truly compelling.
Amazon, too, wanted to enter into gaming and, despite trying for nine years, it has barely made headway; major projects like a “Lord of the Rings” game have been cancelled, and the company isn’t even on most gamers’ radars for anything except shopping.
The trouble with attempts to get into gaming is that it requires a vertically integrated set of competencies that the established players have in spades.
Sony, which has returned itself to profitability on the back of the wildly successful PlayStation 4 and now 5, not only makes its iconic hardware, but also has a stable of talented game studios that produce highly acclaimed games.
In a similar vein, Nintendo has innovated in both its adaptable Switch hardware, and also in its wide collection of intellectual property that has broad appeal across demographics.
Meanwhile, Microsoft also has hardware, its own studios, and also cloud tech to enable its Games Pass, which lets users stream games for a monthly fee — almost like, well, “a Netflix for games.”
It’s true, incumbents are disrupted in tech all the time. Preexisting advantages aren’t a talisman that protect against being usurped by more nimble or smarter competitors.
But Netflix faces an uphill battle. One challenge is building out its own talent in the right way, focusing on both in-house content creation but also acquiring or licensing popular games; it seems unlikely to succeed without something people actually want to play.
The other is technical — of being able to use its engineering team to make a streaming service that matches or betters Microsoft’s and others.
Yet for all the business challenges, there’s also something vaguely symbolic about this need of Netflix to push into new areas.
Tech companies operate at such scale that they can never stay limited to one field. Just as Netflix must expand into gaming, so, too, must Facebook move into virtual reality, payments and photo sharing.
Microsoft must build hardware, a cloud business, and grow its education presence. Google must move into almost everything, dominating search, smartphones and more.
Put another way: Why does Apple need a credit card? Because it can.
When you operate at the scale of billions of users, there is an inbuilt, quasi-monopolist incentive to capitalize on that enormous customer scale and capture new business with new offerings.
Yes, that is a normal part of capitalism — but that doesn’t mean we should praise it.
To the contrary, it is another sign of what the unprecedented scale of big tech leads to: An increasingly consolidated, centralized and ubiquitous digital experience.
Perhaps Netflix will succeed in their aims, and maybe that will give gamers another choice.
But when a company is competing against any form of leisure — hoping to fill every last minute of the day with screens — that success may not be something to celebrate.