Netflix backs out of plan to develop blockbuster videogame

Netflix is giving up on making the videogame equivalent of a Hollywood blockbuster and will instead focus on producing casual games going forward.

The streaming giant earlier this month pulled the plug on developing its own high-end game—what the industry calls a Triple-A title—less than a year into development, a spokeswoman confirmed. The company laid off a team of about 30 people in Southern California, including high-profile veterans who worked on franchises such as Microsoft’s Halo and Sony’s God of War. The project was a multiplayer shooter game, according to a person familiar with the matter.

Triple-A games are typically made for consoles and gaming computers, and can cost hundreds of millions of dollars to develop due to their size, complexity and cinematic quality. They are also increasingly being created for smartphones and tablets, and the one that Netflix was developing was intended to be played on a smartphone, tablet, TV or personal computer.

Netflix has been working on a new app, “Netflix Game Controller,” that can turn a smartphone phone into a controller so that games can be played on a TV or computer. The company is testing the app in more than a half-dozen countries, including the U.S., Germany and Mexico.

Netflix could still put Triple-A games from third parties on its platform. Earlier this year the company added three such titles from Take-Two Interactive Software’s Grand Theft Auto series, though they debuted back in the early 2000s.

The pivot comes after Netflix in June replaced its head of gaming, Mike Verdu, with Alain Tascan, who was previously executive vice president of development at “Fortnite” maker Epic Games. Verdu has since taken on a new role at Netflix involving tech and innovation for games.

Independent games journalist Stephen Totilo earlier reported on the cancellation of the Triple-A game under development and the dismissal of the team behind it.

Last week, Netflix reported its most profitable quarter ever despite slowing subscriber growth. The company added 5.07 million subscribers in the third quarter, compared with 8.76 million net new subscribers during the same period a year earlier.

Netflix moved into videogames in 2021, part of a strategy to keep users coming back to the streaming service when their favorite shows are between seasons and to attract new subscribers. The company, which has also pushed into advertising to diversify revenue, bought multiple game studios to create original titles and license others from third parties. But building up the business has been challenging.

Netflix has launched more than 100 games to date, mostly casual and designed for playing on mobile devices, such as “Oxenfree” and “Too Hot to Handle.” Growth in game downloads has slowed since late 2023, and about 1% of total Netflix daily active users play its games, according to analytics firm Apptopia.

The videogame industry is fiercely competitive and dominated by a handful of legacy businesses such as Madden NFL maker Electronic Arts and Call of Duty developer Activision Blizzard. Since 2022, consumer spending on game content of all kinds has barely grown and game companies have laid off tens of thousands of workers.

This year, Netflix has been considering ways to make money from its games, The Wall Street Journal previously reported. Those could include offering in-app purchases, charging for more sophisticated games or giving some subscribers access to games with ads in them.

Netflix has also been testing the ability for players to stream its games from the cloud to smart TVs and other devices. It has also been pushing games with tie-ins to its own shows and movies, including “Emily in Paris” and “Squid Games.”