In mid-July, the world, local and undecided media spread the news that Netflix was opening
Then, on July 20, Netflix publishes another letter.to shareholders, in which he writes in English and white, where he will begin to develop the gaming direction - this will be a library of mobile games available to subscribers of the service at no additional charge. This fact also caused a lot of analytical manifestations from all those involved in the industry.
Moreover, despite the fact that the company is clearlyIn this way she explained what she plans to do in the near future and why, it was extremely difficult for some experts to stop, and for several weeks we all had the opportunity to watch heated battles in the comments to articles, on social networks, etc.
For those who want to know more
By the way, the "flyby" of information on the media began withBloomberg. At least, it was this resource that most of the media referred to. However, they cited and reprinted only one news item published in the open (free) section. On Bloomberg itself, many publications were devoted to this topic, mainly expert and not very evaluations about what and how Netflix should do in order to achieve success.
My personal favorite is a member of the Bloomberg Opinion HUB (edited by specially trained experts, I think all media need this), Tai Kim.
Just a week after being published by the companyappeals to shareholders, Mr. Kim writes about the fact that Netflix has a real chance to defeat the giants of the gaming industry only if they buy someone large and famous. For example, CD Project RED, the publisher and developer of games about the witcher Geralt. Both companies have successful experiences with this franchise, the market value of CDPR for Netflix is quite lifting, so - "so let's win!"
Surely I couldn't stand aside on thisfestival of intuitive analytics, so I decided to share my thoughts on what to expect from Netflix and what this all means for the industry as a whole.
Netflix and video games
I think it is very important to understand how a companyNetflix sees the entertainment industry and itself in it. Of course, only the top management of the company and those close to him can have the most complete understanding of this point. It remains for us to form our opinion on the basis of public statements of this very top management.
Here are the two most, in my opinion, key (they can also be called programmatic) statements.
- “You have a movie or TV show that you want to watch so badly that you end up staying up very late. It turns out,we are competing with your sleep. And we are winning"- Reed Hastings, CEO of Netflix, 2017
- "We compete (and lose) more with Fortnite than HBO"- letter to shareholders with the results of the 4th quarter of 2018, 01/17/2019
These two statements prove that Netflixunderstand very clearly that the entire entertainment industry competes with each other for the consumer's time, which, as you know, is limited. And since we are not yet able to bypass these restrictions, the struggle for those few hours when a person decides how to entertain himself is not a joke.
The next important point is the experience that the companyaccumulated so far. Does everyone remember that Netflix has long been conducting “reconnaissance in force” in the territory of video games and interactive content? The last phrase is a hint, after which everyone should remember about the last episode of “Black Mirror” (“Black Mirror: Bandersnatch” (2018), which is precisely an interactive film. It also received the most attention from the media, which I personally I explain it solely by the popularity of "Black Mirror" as a series, but certainly not by the fact of interactivity itself. Well, and a little more by the fact that "Bandersnatch" became the first interactive film with live actors on Netflix. Before that, the service experimented with animated projects, in particular , in 2017, a special interactive episode of the animated series “The Adventures of Puss in Boots” “Puss in Boots: Trapped in an Epic Story” was released.
For those who want to know more: interactive cinema
Of course, interactive cinema is notthe invention of Netflix, and indeed something new. Who owns the invention of the format is now very difficult to say. Changing the plot depending on the decisions of the viewer, who, at the moment of making a decision, turns into a player - a long familiar phenomenon for fans of story board games, for example. And avid gamers can tell a lot about such a genre as a "game-movie" and remember its most prominent representatives - Heavy Rain, Last of US and many, many others.
Attempts to provide the viewer with an opportunityvideo playback control was undertaken even before the conversion of video to digital format. The first interactive film in the usual sense of the word was shown in 1967 in Montreal. The picture was called "Kinoavtomat", script and director - Raduz Chinchera (Czech Republic). Interactivity was realized with the help of ... a live moderator, who asked the audience what choice to make at a key moment and, depending on the majority's answer, give a command to the mechanic to start a particular tape.
Well, the digital format allowed the viewer to control the video playback and move from chapter to chapter, making the interactive in the cinema easier and more natural.
Not only "Black Mirror"
After the release of Bundersnatch, the company continued toactively experiment. There are now 14 (!) Interactive titles in the Netflix library. Personally, I really enjoyed the interactive special from Unbreakable Kimmy Schmidt: Kimmy vs the Reverend. Unlike "Black Mirror", in which there are 8 different endings, in this version there is only one ending, and the viewer's "wrong" choices lead to funny options for ending the story (everyone died in one way or another) and then returning to the key episodes.
In 2019, Netflix partneredagreement with Doppio Games to create a 3% Challenge voice game. The project was created specifically for voice assistants Google Assistance and Amazon Alexa and can be played even on devices without a screen, just listening and giving voice commands. The game is based on the fantastic dystopia "3%", which was the first Netflix original series produced in Brazil.
And there was also the famous "The Witcher" in different ways andCollaboration with not yet acquired CDPR - holding the digital festival "WitcherCon" and the announcement of a content add-on to the game "Witcher: Wild Hunt" based on the series from Netflix
So, there is some experience. What's next?
Further - a quote from the last letter to shareholders.“We see games as another new content category for us, just like our original films, animations and TV shows. Games will be included with Netflix subscription at no additional cost, as will movies and TV shows. At the initial stage, we will focus primarily on mobile games. We're more excited than ever with our films and series offerings, and we expect a long streak of increased investment and growth across all of our existing content categories, but since we've been in original programming for almost a decade now, we think it's time to learn more about how our users will appreciate the games. "
Everything seems clear, but there are questions, right?First, why mobile? But what about consoles, next-gen, peka-boyars and cloud gaming in general? Secondly, everything is somehow boring. After interactive movies, voice games, is it just a library of games for subscribers? Is that all? Thirdly, why where?
While not close to the Netflix executives, I still love to fantasize about being close to them. Therefore, I will try to answer these questions myself.
Why Mobile Games?Because mobile is our everything. It's a video game category that's growing year after year, eating chunks off the rest of the segments - PC games, consoles, and more (yes, there are other segments too!)
It will not be superfluous to remind you that in mobilethe technological barrier to the development of content directions has been completely removed. Namely, almost any modern smartphone that costs more than $ 200 has sufficient computing power to work with high-quality interactive content, and modern mobile networks have sufficient bandwidth for comfortable delivery of this content.
In other words, in the hands of the planet's population -billions of reasonably capable “mobile computers” (hello, Nokia from 2006) connected to high-speed mobile Internet access networks. And every year these devices are becoming more powerful, and access is becoming faster.
Netflix understands the importance of mobile as well.Recently the company expanded the geography of its new tariff plan "Mobile only" - now the tariff is available in 78 countries (Southeast Asia and Africa). The "Mobile only" tariff plan allows you to view SD content through a mobile application and download it on one device. While being the cheapest plan, it nevertheless compensates for the lowest revenue per subscriber with the best retention and acquisition rates.
It is logical to assume that the appearance of a library of games looks like an expected continuation of expansion into the mobile segment
For those who want to know more: Who is Mr. Verdu?
Who is this Michael Verdu since joining Netflixwho started it all? Well, as we have already found out, it all started long before his arrival. However, the information on who Michael Verdu is might help a little to understand what the company's management expects from the gaming direction. Michael Verdu is one of the veterans of the video game industry. His career as a game developer began in 1990, when he partnered with the infamous Bob Bates to found Legend Entertainment, which has released over 15 PC games in the quest, adventure and shooter genres. The company was then bought by GT Interactive, which in turn was acquired by Atari.
At Atari, Michael headed the development studioshooters. Under his leadership, such games as Unreal II, Unreal: Return to Na Pali and Robert Jordan's The Wheel of Time were released. Then Mr. Verdu moved to Electronics Arts and took the position of general manager of EA Los Angeles – Command & Conquer, Lord of the Rings: Battle for Middle-earth and Medal of Honor. Then - Zynga, Senior Vice President, Co-President of Games (Poker, Farmville, Mafia Wars), after some time - again Electronic Arts, but already in the position of Senior Vice
President EA Mobile (Star Wars: Galaxy of Heroes, SimCity Build It, Plants vs. Zombies, Sims Free Play). After that - Facebook, and now - Netflix.
The experience and expertise of Mr. Verdu is very difficultimagine - he stood at the origins of the industry and successfully grew with it. What he will do once he has the resources and capabilities of Netflix at his disposal is anyone's guess, but I'm sure it will be very cool.
Okay, there will be a library of mobile games. Is that all?
Of course no. But what else - I don't know.And nobody knows. And most importantly, Netflix probably doesn't know either. At least because the space for experimentation is enormous. Alexey Savchenko, who is much more competent in these matters (at the time of the description, works at Epic Games), described everything very succinctly and accurately. For those who are too lazy to follow the link, I will quote the most important points from his post.
- Netflix has colossal expertise in big data analytics(BigData) and in the market operation of IP (OIS –objects of intellectual property). Moreover, the company is constantly increasing this expertise and constantly using it. Just remember the legendary algorithm for selecting content “most likely you will like it.”
- The company does not need to immediately make money on new content by all means.
- The company knows how to check and predict the success of new entertainment content– this is a very cool thing that they will obviously actively use.
- Netflix very rarely acts as a "catch-up" in the industry, the company is targeting blue oceans at the DNA level.
You also need to note that Netflixthere really is no need to care and keep in mind “what about HBO? (Disney, Apple, Amazon) ". Not because the company holds a leading position in its home market. And not because these are weak competitors, no.
Just for the time being, for the time being, they can all grow withinby eating away shares from cable and broadcast television. Yes Yes! In their native US market, streaming services occupy only 27% of Americans' screen time. 40% for cable television and 23% – from broadcast networks. That is, there is where to grow and at the expense of whom.
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A source:Netflix letter to shareholders
What else could be? In theory. Analyze it!
In order to seriously analyze whichNetflix has opportunities in the video game market, it needs data that I don't have. Therefore, I will not analyze, but assume. No less serious, but don't take it as an analyst.
So what can Netflix do.
- Continue to use video games for in-house promotional content, releasing games-by-films.An example is Stranger Things.In my opinion, the company is unlikely to focus on this. There are many reasons for this, the main one of which is a fairly banal process that is now used by almost all copyright holders of entertainment content.
- Develop interactive video content, adding more variety of gamingmechanic. Yes, this is quite possible, however, we must not forget that interactive video content can be different. Special episode of "Black Mirror" – This is a live-action film with the possibility of non-linear transition from the remote control. But there is also a “game-film”, when the viewer literally controls the characters at certain moments. Can Netflix figure out how to implement this on the TV platform? It's possible.
- Add cloud gaming to the list of services(streaming gameplay to the screensubscriber-player). On the one hand, it’s a good story, especially considering the company’s competencies in video encoding and compression. On the other hand, looking at what is happening in this industry with existing players (Nvidia, Google, Microsoft), something tells me that this should not be expected from Netflix in the coming years. Perhaps in the form of some very simple collaboration with another service.
- Project Endemic - Realizable and Business-Only for Netflix. In my opinion, this is the most likely scenario. And subjectively – the most desirable.
What could it be? Literally anything. For example, the ability to unlock new episodes of a show before others based on your performance in the game. Corny, I know.
Well, or the formation of an individual plot independing on the choices made while playing the game. The gameplay is recorded, the game engine processes it “on the fly” into a “movie format” and – please, your individual episode of the new “Star Trek” is ready.
And then you can share it, and thensubscribers will vote for the best option, and then there will be a special version, compiled from the best episodes based on the results of audience choice. In gamer parlance, this can be called a “let’s play movie.” Well, or a cross-media project in which video episodes and game sessions with a plot connection alternate.
In general, I repeat, it can be anything.
For those who want to know more: everything will be Superapp
There is one more interesting question without touchingwhich is difficult to claim a complete picture. Namely, where is this all going? In my opinion, “that’s all” – This is the process of forming superapps in the entertainment industry. Superapps, in turn, are a completely logical scenario for solving the problem of competition with time. Well, that is, we understand that we cannot add hours to a person’s day. And we want those few minutes that a person spends on his entertainment to be with us. How to do it? It is logical to offer him an all-in-one solution. Do you want a movie? Please. Or maybe a series? Please! Would you like to play? Here, if you please...
Of course, the very word "superapp" makessuspect the interlocutor of the "WeChat brain". Therefore, I prefer to use the word "portal". So, entertainment portals are a solution that at least some market players will inevitably come to.
And here it will be interesting.For example, a digital game distribution store (conditional Steam) in partnership with a cloud gaming service (conditional Nvidia GeForce Now) and a video content streaming service (conditional Disney +) negotiates and launches a portal-SuperApp, where in one application and for one monthly fee a user can watch a series about Loki, play the Loki game, record the gameplay of the Loki game and show everyone else. And so on and so forth. I say it will be interesting here.
And what about the rest?
Of course, other players in the interactive marketentertainment is also not sitting idle. The use of one franchise in all possible formats (game-film-series-merch) has long become mandatory. All possible collaborations and cross-promotions – Same. The industry is on the threshold of something important, all that remains is to understand what and who will cross this threshold. What interesting things can be noted?
First.Netflix is not the only video streaming company to offer a library of games to its subscribers.... Among the services I use, there are already two of them.
The first is Plex (a software product that allowsorganize your own cloud video streaming). At the beginning of the year, the company launched an add-on service Plex Arcade, which allows everyone to play retro games through the cloud. Cloudy retro gaming is a stunning word construction, but that's what it is.
Well, our own Netflix, Megogo's company,a year ago, launched games in its application on SmartTV platforms (LG WebOS and Samsung Tizen). By the way, it is smart TVs that some analysts now call "the last blue ocean for game devs."
Second.Right now, there are at least two companies on the market that can launch an entertainment-superapp Entertainment MegaPortalby simply rebuilding the services they already have.
These are Alphabet and Amazon.The first thing you need to do is repack Google Play Movies, YouTube & YouTube Music, Google Play Pass and Google Stadia. The second is to do the same exercise with the services Prime Video, Prime Music, Prime Games, Amazon Luna and Twitch.
The rest (Apple, Microsoft, Disney) need to either merge or buy the missing services.
In conclusion, I want to say that the very fact of launchby Netflix, the video games division is a very good sign for the entertainment industry. In my opinion, it is Netflix that has the best chances of making a qualitative breakthrough in format transformation and business models for using these transformations, which the industry has come close to.
Well, if it is short and simple, it will be very cool and interesting.