Netflix wants to offer cloud gaming – a streaming service for mobile and video games. Will the movie and series streaming giant succeed in this? It depends on how much stamina they have.
Mike Verdu, Netflix’s vice president of games, dropped the bombshell after exactly three hours and 39 minutes: «We’re very seriously exploring a cloud gaming offering so that we can reach members on TVs and on PCs.»
The many obstacles of cloud gaming
How could everything work out after all?
Netflix games vice president Verdu isn’t impressed by this. «With internal games, we want to build institutional competence. We want teams to go through multiple cycles together and essentially get really, really good at working together and delivering great products, and sometimes the only way you can do that is to give them the space inside the organisation,» he said optimistically during the TechCrunch conference.
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Interesting. At the TechCrunch Disrupt Conference, Verdu just announced a cloud gaming service for smartphones, TVs and PCs and also implied that it wants to do better than Google. Just four years ago, the search giant introduced its own cloud gaming service, Stadia, with much fanfare. This January, it will already be shut down again, adding to the long list of failed cloud gaming services.
But Netflix knows how it wants to do it better: «We’re going to approach this the same way we did with mobile, which is start small, be humble, be thoughtful, and then build out,» Verdu says. As of today, Netflix has 35 mobile games on offer. 55 new ones are in the works. In addition, a new game studio is to be built in Southern California. Microsoft’s Game Pass is likely to serve as the business model. Does this make Netflix’s cloud gaming a sure-fire success? Hardly.
The first challenge Netflix will have to overcome is likely to be establishing and expanding a solid technical infrastructure for cloud gaming. At least that’s what Joost van Dreunen from the NYU Stern School of Business old industry magazine The Verge states. According to Dreunen, Netflix’s backend is largely based on Amazon Web Services (AWS), which isn’t ideal for streaming games. Especially not multiplayer games. Dreunen says large studios such as Roblox or Riot, for example, have built their own services to ensure lower latency and faster download times. Netflix would therefore be facing a similar commitment, both in terms of time and money.
Another obstacle is likely to be the coverage of broadband Internet, which is still poor in parts of the world, including the US, which is Netflix’s home market. Cloud gaming, as well as streaming UHD content, requires a bandwidth of at least 25 megabits per second (Mbit/s). To put this into context, according to Akamai's «State of the Internet» report, the average speed of surfing in Switzerland was around 21.7 Mbit/s in 2017, putting it in fifth place in a global comparison and well ahead of the US. No wonder many cloud gaming services are discontinued after a short time.
The largest challenge, however, is offering or developing exclusive games for their own platform. How else is Netflix supposed to compete against game streaming rivals such as Microsoft or Nvidia? However, Google and Amazon have already proven that developing games is difficult. The search giant shut down its own Stadia studios as early as 2021, not even two years after the official launch of Stadia. And Amazon has been trying to produce a hit game for eight years and has invested tens of millions of dollars – without success. The MMO «New World» was the only game that landed a good start. By now, however, only 50,000 players populate this «New World» on average – 15 million had originally registered. What’s complicating matters for Netflix is that Microsoft has a decades-long know-how advantage in game development.
Sounds good, but could mean anything or nothing. It seems that Verdu is deliberately vague on the subject. After all, no one at Netflix wants to suffer similar humiliation as Google did with Stadia. And it’s too early to tell what the chances of success are anyway. However, there is a concrete scenario that might lead to success, as Lewis Ward from the US market research company IDC described to The Verge: if Netflix were to celebrate another viral streaming hit such as «Squid Game» or «Stranger Things» and accompany it with an equally good AAA game – available exclusively via the Netflix cloud gaming platform, of course.
