For years, we said to take games efforts of these companies seriously – now they are serious players

MIDiA has always been bullish about traditionally non-gaming tech companies’ opportunity in games. The first time we wrote about Netflix’s opportunity in games was in 2017. We also wrote about the significance of Apple Arcade early on (here, here, and reiterated reasons for the games industry to take it seriously again, here).

The games industry has often been rather sceptical, or in some cases even cynical, of both companies’ efforts for a long time. Typically reacting along the lines of: “ok they will have some games, but they are not really serious games companies / propositions so they will not really attract ‘gamers’.“

Growing impact

Recently, voices in the industry have been slowly changing their tune about Netflix Games and Apple Arcade, but it is getting a bit too late – these companies are now serious players in games. Not because of how much money their games make, the games they have, or how many, but because both are established enough (and growing) to eat into the most business-critical metric of pure-play games companies of today – time spent.

Crudely / illustratively speaking to demonstrate the point – it does not really matter if Netflix has a game ‘comparable’ to, say, Fornite or not. If Netflix has games that convince current Fornite players to regularly re-allocate even just one minute of their precious time to – it is a problem for Fornite/Epic Games and a win for Netflix.

Netflix

Indeed, Netflix’s games downloads are growing. In 2023, Netflix games downloads increased 180% year over year, according to Sensor Tower. Of course, this does not necessarily speak to time spent on these games, but it indicates that an increasing number of gamers are willing to give it a go. Meanwhile, the strength of Netflix’s games catalogue is growing. From early casual games, it has been enhanced by the addition of GTA titles and SEGA’s Football Manager 2024 (currently the number five sports game on Apple App Store charts) to name just a few. Netflix is also unlikely to slow down, as demonstrated by reports that Netflix is working on an original AAA title. Further indications of Netflix’s games development to capture time spend and remain ‘sticky’ are the company’s plans to start experimenting with in-game purchases and advertising. Netflix believes it has got enough of an initial user base to start eating at gamers’ time and money spent on games. This will evolve into an even greater problem for traditional pure-play companies in the long-term, particularly if Netflix Games decides to increasingly put out original games. This might take a while yet, but key to remember is that when Netflix launched it was also mostly about popular third-party content. Before opening the floodgates of original content production, it got third parties addicted to large checks in order to host popular content and gain user traction. We could see a similar effort playing out in terms games over the next five to ten years.

Apple Arcade

Apple Arcade is a similar story. In just a few years, it has managed to build up a solid foothold. 10% of US consumers use Apple Arcade weekly (MIDiA Research consumer survey Q4 2023). For context, this nearly matches that of Nintendo Switch Online or Steam (both at 11% in the US) and double Ubisoft+ (5%) or Nvidia’s GeForce Now (4%). Apple also has a number of Arcade originals.

Getting there

Both Apple and Netflix were able to use their deep investment pockets to get there – largely through non-monetised games included as parts of their respective subscriptions and / or propositions. However, time-spent eating into potential success of pure-play games companies stands and strengthens with every new successful original these companies release. The more confident they grow in capturing time spent (which, even without direct monetisation, helps further their respective business goals), the more likely they will begin eating into gamers’ money spent too.

Take Netflix and Apple Arcade seriously

Games companies should not have ignored Apple Arcade’s and Netflix Games’ reports for the last few years, but we are where we are. Not that they could have stopped their entry into the market, but they could have prepared in a proactive way by fostering early partnerships and goodwill (well done to those that have done so!). In the near future, as Apple Arcade and Netflix Games gain strength, many games companies will resort to reactionary measures instead.

So, what should games companies do with Netflix Games and Apple Arcade now? For most, there is not much meaningful ‘competing against’ to be done. The best advice is to think of ways of fostering mutually beneficial relationships and partnerships as soon as possible. The more these types of traditionally non-gaming tech companies grow in games, the tougher the terms of engagement pure-play games companies will encounter when looking to partner with them down the line.