In what appears to be the fourth big move in the gaming world this year, Netflix has acquired games developer Next Games. Next Games is the most well-known for its titles based off the shows Stranger Things and Walking Dead. Next Games is valued at approximately $72 million, and the deal is being done in an all-cash transaction, TechCrunch reports. Next Games’ board has already approved the deal and is recommending it to their shareholders, but the deal has yet to be completed as of now. They expect the deal to close by the end of their second quarter.
Previous forays Netflix has made into gaming include their acquisition of Night School Studio in October 2021. Additionally, in July of last year, they hired Mike Verdu, who has previously worked with Electronic Arts and Facebook.
Netflix launched mobile games on Android in November, including two Stranger Things games. Their gaming service allows users to play games with no ads, additional fees or in-app purchases. At launch, they included five titles from various developers. Users were able to sign in with their existing Netflix memberships, and some games can be downloaded and played offline. At launch, games were only available on Android devices, but they were quickly added to iOS platforms.
This move comes as Netflix further pushes to expand their reach into the world of gaming. Over the last year, Netflix has been working to further diversify their revenue streams and portfolio. The move will give Next Games more capital to expand on existing titles. Acquiring Next Games would allow Netflix to replicate their intellectual properties to move into gaming, CNBC reported.
In 2020, Next Games showed €27.2 million in revenue (about $30.2 million U.S.), with 95% of their sales from in-app purchases that year. Given that Netflix has prided themselves in not offering in-app purchases, it will be interesting to see how that shifts when Netflix oversees the company.
Teemu Huuhtanen founded Next Games in 2013, after a background in Finland’s gaming ecosystem. Previously, he was an executive at Rovio, the publisher of Angry Birds. He also has a background of creating virtual worlds, with the website Habbo Hotel. Huuhtanen expressed his excitement to be joining Netflix on this venture and could not wait to start creating games based off of their entertainment franchises.
“Joining forces with the world’s largest streaming service, Netflix, presents an opportunity for a logical and exciting continuation of our strategy to craft interactive experiences for the world to enjoy. Our close collaboration with Netflix on Stranger Things: Puzzle Tales has already proven that together we create a strong partnership. This is a unique opportunity to level-up the studio on all fronts and continue on our mission together,” Huuhtanen said.
Michael Verdu, vice president of games for Netflix said, “Next Games has a seasoned management team, strong track record with mobile games based on entertainment franchises, and solid operational capabilities. We are excited for Next Games to join Netflix as a core studio in a strategic reason and key talent market, expanding our internal game studio capabilities. While we’re just getting started in games, I am confident that together with Next Games we will be able to build a portfolio of world class games that will delight our members around the world.”
The world of gaming is getting more competitive with each passing day, and streaming companies, software companies and gaming companies are all making plays to grow their market share. In this case, Netflix is executing on its larger strategy to attract new members through their gaming offerings and making series like Stranger Things even stickier. As streaming membership growth slows, Netflix has expanded into podcasts, merch and gaming, and over time, those revenue streams will help differentiate the company from its streaming competitors.