Report: Netflix is Exploring Different Ways to Monetize its Game Library

A little more than two years after Netflix started offering access to a selection of mobile games to its subscribers, the company is reportedly exploring different ways to monetize this content. According to a report from the Wall Street Journal, the different ideas that have been floating around in recent discussions between executives include the introduction of ads in games.

“Executives at the streaming giant have had discussions in recent months about how to generate revenue from its games,” the WSJ wrote, citing people familiar with the discussions. “Some of the ideas that have been discussed include in-app purchases, charging for more sophisticated games it is developing or giving subscribers to its newer ad-supported tier access to games with ads in them, the people said.”

As of today, Netflix subscribers can download over 50 mobile games on iOS and Android with no ads or in-app purchases. The latest additions include the remastered version of the Grand Theft Auto trilogy, which is currently exclusively available on mobile via a Netflix subscription. Netflix has also acquired or opened several game studios, and the company started testing a new cloud gaming service on TVs last year.

Netflix announced 247.15 million subscribers in Q3 2023, and the company continues to search for new areas of growth, as well as other things to deliver more value to its subscribers. But if the company has big ambitions in gaming, Apptopia estimated last year that fewer than 1% of Netflix subscribers had downloaded Netflix games in 2023.

After Netflix raised the price for some of its subscription tiers in the U.S., UK, and France last Fall, the company will need to make its gaming push sustainable financially. Developing ambitious first-party games is really expensive these days, but so is licensing blockbuster IPs like GTA. According to analyst estimations cited by the Wall Street Journal, Netflix spent approximately $1 billion on its gaming business so far, while the company invests about $17 billion per year on its main activity, which remains the streaming of movies and TV shows.

According to the Wall Street Journal, “Netflix encourages open debate internally on its strategy, which is a key pillar of its culture, and such discussions don’t mean the company will decide to monetize games.” However, Netflix experimenting with other ways to monetize its gaming content seems pretty much inevitable. Even Microsoft seems to be open to the idea of having an ad-supported model for Xbox Game Pass.

Back in December 2022, Netflix CEO Reed Hastings openly admitted that he had regrets about not launching an ad-supported tier earlier. Netflix discontinued its ad-free Basic plan in several markets last year, and the company also explained in a letter to shareholders that its ad-supported plan was now bringing more revenue per user.