What happened — Netflix made another gaming acquisition yesterday, buying out a mobile games developer called Next Games for $72 million — further sinking its teeth into the mobile and casual gaming arena.
Some context: as growth in its core business began to flatline post-COVID, Netflix had a challenging question to answer — what do we do next? Competition was catching up, and people flush with options were going elsewhere.
Reed Hastings picked gaming (vs. sports, or news) for its obviously rising popularity. Systemic barriers opening up on the horizon like 5G making game-streaming easy, AI advances making high-quality graphics better, make this pursuit all the more exciting.
So what does Next do: the Finland-based Next Games makes free-to-play mobile games, based on popular movies, comics and even shows like Netflix’s Stranger Things. It’s a public company, making ~$30 million in revenues a year, with 95% of that moolah coming from in-game purchases.
And there’s natural synergies already — first, Netflix now has a hook into the rapidly growing mobile gaming segment. Second, Netflix can get the Next-team to make more games based on its content-slate — spurring an in-house game-dev machine.
Bottomline — gaming is a ~$200 billion market, 2x the size of the global movie business. You can see why the streamers are tempted here so much!