Survey Supports Netflix's Cloud Gaming Strategy

Not a few gaming industry experts have observed that Netflix faces daunting hurdles in entering the cloud gaming sector.

However, a new global survey appears to provide some support for the wisdom of Netflix’s careful efforts to extend its gaming initiative into the cloud.  

The survey of a representative sample of 12,000 people who play electronic games on any type of device was conducted by Savanta in the U.S., U.K., Canada, France, Germany, Netherlands and Spain in June.

Looking at the overall prospects for the still-nascent cloud gaming business, the study found that a third (33%) of committed gamers and 10% of casual gamers reported they already use such a service, and 82% of all of those who have tried cloud gaming saying they’re likely to use it again.

Adoption was found to be highest in Spain and the U.S., at 35% and 32%, respectively.

And while nearly 44% “non-passionate” gamers and 26% of “passionate” gamers reported being unaware of cloud gaming before taking the survey, 36% of these respondents within the U.S. said they are open to the concept, along with 44% in Spain and 30% in the U.K.

Netflix launched gaming downloads through its mobile app in November 2021, and announced only this August that it was starting a limited cloud gaming beta test among U.K. and Canadian subscribers, allowing them to access games on PCs and Macs through Netflix.com and supported browsers.

Still, Savanta found a fifth (22%) of all survey participants reported that they have downloaded at least one game from the service, and 77% of these said they will likely do so again. Nearly half (45%) who had not previously been aware of Netflix’s games said they would try using the current service.

Much of that could have to do with Netflix’s free-to-subscribers model. Despite heavy investment in acquiring game development studios and launching its own, Netflix has refrained from charging for access to its games, instead viewing them as a long-term investment in a value-added designed to boost retention rates and drive new subscriptions.

That aligns with a finding that one in five gamers say that buying games would be the first entertainment luxury they would forgo if they needed to cut expenses due to inflation. Just 12% said the same about TV/film streaming subscriptions.

According to Savanta, Netflix is also wise in positioning its cloud-based games to appeal to casual gamers, rather than oh-so-picky committed gamers.

Even Xbox maker Microsoft — which controlled between 50% and 60% of monthly active cloud-gaming users last year, according to a study by the U.K.’s Competition and Markets Authority — recently failed in its launch of cloud gaming platform Google Stadia due to failing to win over enough committed gamers.  

“You're going up against an entrenched consumer behavior around gaming,” IDC research director Lewis Ward recently told Yahoo Finance technology Editor Howley. “And if you don't hit all of their checkboxes for what's necessary to make a good gaming experience, you will fail.”

Microsoft’s proposed $69-billion acquisition of Activision Blizzard — currently in limbo due to antitrust actions in the U.S. and other countries — is intended to target the lucrative committed gamers segment.

“However, it would be short-sighted to discount the collective opportunity in casual gamers,” notes Shaun Austin, senior vice president media at Savanta. “Seventy percent of our sample play mainly on their smartphone and 52 percent prefer freemium games. The potential in this segment has certainly not been lost on Netflix.”  

The failure of Google’s Stadia service “suggests that the committed gamer segment, one that obsesses over technical details like frame rates and data usage caps, is always going to be a tough one to crack,” Austin adds. “Netflix is taking a very different strategy in following the likes of Facebook to target the casual market and positioning games as a value-add, rather than a destination. Games represent sticky content for a platform likely to be hit hard both by the cost-of-living-crisis and [the writers’ and actors’ strikes]. Moreover, Netflix’s IP in the gaming space could offer a host of brand-extension opportunities, including product placement for brand advertisers. Customers don’t need to give anything up, rather they have all to gain. If 45% of Netflix’s global audience of 238 million gives gaming a go, then Netflix could become a major force in cloud gaming space.”

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