Why Netflix, TikTok and Tesla have entered the (gaming) chat
This article is part of the “Exploring the future of gaming” series.
Netflix
“Maybe someday we’ll see a game that spawns a film or a series,” Netflix chief operating officer and chief product officer Greg Peters said in 2021. “That would be an amazing place to get to, to really see the rich interplay between these different forms of entertainment.” Being part of transmedia worlds is probably why Netflix aims to become a serious player in the gaming sphere.
source: Netflix
Netflix purchased three game studios and is looking to build out a games business that can create synergy between what people watch and what they’re playing. That includes adapting video games like “League of Legends” and “The Witcher” into shows while also adapting shows into games. Netflix is also tacking their name into third-party titles with a Netflix branded “League of Legends” spinoff game made by a third-party developer, Choice Provisions, as a Netflix mobile game.
According to Apptopia, Netflix games have been downloaded 23.3 million times in total, and on average, there are 1.7 million daily users. While that less than 1% of Netflix’s subscribers, it’s still a commendable start into the gaming sector. Starting with the turn-based strategy game “Into The Breach”, Netflix is allowing users to set up “game handle” to make the gaming experience more social. With plans to offer nearly 50 mobile games by the end of the year, it’s likely that the number of gaming DAUs will increase.
TikTok
TikTok, an app with more than 1 billion monthly active users (MAUs), has been planning a big push into gaming, as featuring games on its platform would boost advertising revenue as well as the amount of time users spend on the app.
In a exclusive Reuters report in May 2022, it was reported that the company has tested bringing HTML5 games, a form of minigame, to its app through tie-ups with third-party game developers and studios such as Zynga Inc. To date, TikTok has quietly added over half a dozen mini-games into its app.
Tesla
Elon Musk has been indicating recently that he believes “entertainment will be critical when cars drive themselves.”, which is why Tesla has been investing heavily into integrating video games into its in-car entertainment system and have recently announced that they are working on integrating Steam’s platform in its vehicles.
Tesla has recently deployed a new entertainment computer in the Model S and Model X that is geared toward video games, it has more storage space to be able to handle more games on the platform at the same time.
source: Tesla
These moves points to the fact that gaming is a space that big tech firms can’t ignore. The question I had was why are these tech companies moving into gaming? We will explore that in this article.
Game industry overview
Netflix saying that "We compete with (and lose to) Fortnite more than HBO", shows the rising dominance of games in consumer screen time. In a Newzoo survey, young generations spend more or nearly as much time engaging with games than any other form of entertainment.
source: Newzoo
Interestingly, the for the League of Legends world championships (2020) was higher than Games of thrones finale (2018). Esports audience has been growing in 2021 and 2022 yoy by 12.4% and 8.7% respectively, and is expected to have a CAGR of 8% to 2025. Perhaps in the future, we can expect esports viewership to compete with that of NFL’s.
source: The Block Research
There are currently close to 2.96 billion global players and growing. Just to put this number into perspective, in Q2 2022, Tiktok has about 1 billion MAUs and Facebook has about 2.93 billion MAUs, in the age of the attention economy now, surely these companies will want to tap into the growing gaming sector.
In the attention economy, companies monetize through advertisements. We know that advertisement chases engagement. We went from print → tv → digital → interactive media. Video games are a type of interactive media. The global advertising market in 2021 reached US$700 billion while the global gaming market is approximately US$180 billion. Moving forward, it is likely that the gaming industry will be an increasing important advertisement channel.
A total of 8.3 billion game live streaming hours has been watched in Q2 2022 or about 2.8 billion hours per month (source: stream hatchet). This is a 3x increase from about 0.95 billion hours per month in Q2 2019. While the monthly game live streaming hours in Q2 2022 is only half of the 6 billion hours per month for Netflix, it is likely that these numbers will continue its uptrend given the huge spike we’ve seen in numbers since 2019. Along with that are the importance of the game live streaming and esports businesses, perhaps we can think of game streamers as the new actor/actresses. Just as how we watch actors/actresses in movies, many of the young gen alpha or gen z will watch their favorite streamers play games.
After exploring the above info, I think we can say that gaming is on the verge of an exponential explosion. Let us explore what can expect going forward in the next section.
What can we expect going forward?
New business models within the gaming and advertising space may emerge. For example, with the rise of esports, platforms like gamerzclass offering game specific training by professional gamers have started, just like learning to play Golf or Tennis.
As advertisers look towards in-game/virtual world advertisements, game designers will be the architects for curating and displaying new types of ads. Anyone who watches YouTube or stream services know how annoying non-skippable ads are. Perhaps future in-game ads can be less disruptive, but retaining its effectiveness.
As engagement move towards games, we may see consumer apps follow tiktok’s footsteps in adding mini-games into their platforms to keep users engaged on their mobile applications for a longer period of time so as to increase probability of monetizing them. This is where gaming and consumer apps could converge, and we may see interesting innovations on this front.
Many have touched on how future games may look like, including the use of Virtual Reality (VR) or Augmented Reality (AR), but the fundamental importance of the gaming industry comes from where people’s attention are and where engagement is driven to. With almost 3 billion players globally and increasing, the future of gaming is bright and it’s no wonder gaming is the new big tech battleground.
This is the first article of the “Exploring the future of gaming” series, where we explore the edges of the video gaming industry and how gaming can help ignite the metaverse. Stay tuned for the next article drop soon and remember to subscribe if you wanna be the first to read it.