Netflix Will Not Survive the Video Game Industry
This week, Netflix announced that it shut down two more video game studios: Night School Studios (Oxenfree, Afterparty, Unhinged) and Moonloot (never released a game). This means that in half a decade, Netflix has entered the video game market, started or acquired seven different game studios, shut down four of them, and sold off another. All of this has happened in the COVID Video Game Correction™ timeline that so many video game companies have fallen into, leading to massive layoffs and studio closures that are unprecedented even for the games industry. However, I think these have only accelerated Netflix’s gaming woes, not caused them. To me, Netflix is falling into the same trap that every large video game company has fallen into and can’t get out of without cutting off its own limbs: the video game subscription model.
The ironic thing is that a lot of this can be traced backward to Netflix. Netflix is largely cited as the primary party that popularized streaming services as a concept, getting skin in the game all the way back in early 2007 when it launched its streaming platform to collective “mehs” around the globe. While Netflix certainly wasn’t the first streaming service, it became the most synonymous with the term. As Netflix and the internet grew, other companies joined the fray. Streaming services are now a dime a dozen, what with Netflix, Hulu, HBO Max, Disney+, Paramount+, Peacock, Apple TV, Prime Video, Crunchyroll, ESPN+, FuboTV, Tubi, and a seemingly endless number of others.
Game Companies Love Subscription Models
For the better part of the last decade, video game companies have been wondering how they can get a piece of that pie. While not all of the attempts have been centered on cloud gaming (the video game equivalent of a streaming service), we’ve seen a huge push by a lot of large companies in recent years to secure a consistent and seemingly endless stream of money by shifting toward subscription models in some way or another.
Gaming subscription models have been around for a long time now, most notably being popular in the MMO space where instead of paying for a game once, you pay a monthly or annual subscription fee for access to the game. World of Warcraft, for example, has survived nearly 20 years on this model, and it’s not going away anytime soon. There are some very successful in-game subscription models as well, such as the Fortnite Crew Subscription which gives the player access to multiple battle passes and cosmetics for a modest monthly fee.
However, these models are tied to specific games. If that game ever gets sunset at any point, those players are gone and along with the corresponding revenue. Such things are tied a little too closely to the whims of players or the winds of the gaming industry. The holy grail of video game subscription models is a Netflix-style one where you’re not charging for parts of a game, nor are you charging for a particular game itself, but rather a platform that can adapt to those player whims or those industry winds.
Modern Game Subscription Failures
Many have come before, and all have failed.
What we’ve found over the course of the past ten years or so as an industry is just how difficult it is for even the largest video game companies with seemingly infinite money to sustain a successful subscription-based platform for gaming.
One of the first to hop into this era of subscription-based gaming platforms was actually Nvidia with GeForce Now. GeForce Now is a cloud gaming platform with support for more than 4,500 games. Impressive, right? The problem: you have to already own the games in order to play them on the cloud. It’s essentially Netflix if all Netflix did was give you a central hub for watching movies that you own on Prime Video, YouTube, and a bunch of other platforms. And you still have to pay a subscription fee for it. The crazy thing is that this is one of the most successful implementations of platform subscriptions in gaming. It has tens of millions of users (although there is a free tier, so those numbers include non-paying users), and it’s sustainable since Nvidia doesn’t have to actually produce any games; they just have to keep supporting games and building partnerships with game publishers to allow the games to be played with the platform.
Believe it or not, despite how useless I personally find GeForce Now to be, I think it could end up being the Netflix of gaming. Much like Netflix, it got in early, it’s starting off relatively light on usefulness, and it’s maintaining a subscriber base that it can carry into future success if it’s smart about it. And what’s nice for Nvidia is that they have so many contacts and partnerships in the games industry due to them monopolizing half of the GPU market for PC gaming. However, we’ll see if the sustainability lasts. at the beginning of 2026, Nvidia started putting 100-hour caps on how much gaming their subscribers could do per month without shilling out more money for the service. It’s hard to feel confident about the business of their cloud gaming service when this is a clear way of reducing costs. Of course, gamers replied with backlash because they’re already paying streaming service prices for something that doesn’t even give them access to games that they don’t already own. Now Nvidia is going to tell them how many hours they’re allowed to play of games that they already own.
Google tried their hand at a video game subscription service with Google Stadia, a cloud gaming service that struggled tremendously to find the right audience. Launched in 2019, Stadia tried to target the mobile market via smartphones and tablets in addition to traditional TVs and computers by showing off how someone could seamlessly take their Stadia controller from one device type to another to play the same game. Stadia was a tough sell because it required a subscription as well as purchasing the game, all the while offering very little content compared to what gamers expected.
This cloud gaming idea of offering server-run games that simply stream gameplay to the player’s device, much like modern streaming services, really took off in 2019 and 2020. XBOX Cloud Gaming is by far the most successful cloud gaming service, practically monopolizing the market. However, I firmly believe that if it weren’t for COVID-19, cloud gaming would be a failed experiment that even XBOX couldn’t keep afloat. COVID brought the largest demand for gaming of all time, and I think that made cloud gaming a viable service that was able to survive to this point. I question how much longevity services similar to Stadia and XBOX Cloud Gaming have left today.
XBOX Cloud Gaming is wrapped up in XBOX Game Pass, a subscription service that has seen a lot of hardship over the years. The idea of offering games in exchange for a subscription fee is very much aligned with streaming services, allowing virtually unlimited access as long as you have some money left in your bank account every month. Phil Spencer, former head of XBOX, went all in on the Game Pass strategy, and it has spelled doom for the organization that just had to go through a major Rest following a change in leadership to try to get the business healthy again. Game Pass offers a lot of value, but it has led to XBOX bleeding money, and it has missed every projection in every way.
PlayStation Plus, Sony’s answer to Game Pass, has been a success story compared to the other subscription services. However, it’s a success story because it piggybacks off of the succuss of its games. PlayStation already had a pipeline for creating incredible games that exceed the industry standard, especially compared to XBOX. That’s why PlayStation 2 is the best-selling console of all time (until Nintendo Switch eventually surpasses it in the coming years), half of the top 10 best-selling consoles of all time are the five PlayStations, and XBOX just barely cracks that top 10 with Xbox 360. Furthermore, PlayStation didn’t try to pivot their entire strategy toward supporting PlayStation Plus. Instead, PlayStation Plus thrives off of PlayStation’s back catalogue of wonderful games that players are happy to pay some extra money each month to go back and experience.
Why Are There So Many Failures?
This is a loaded question. How dare I ask myself this! I think ultimately, it comes down to a few key factors:
Content Is King: It’s hard to provide the value that a subscription service requires. This was one of Stadia’s problems. Stadia’s servers running the games that it offered ran on Linux. According to surveying done by W3Techs in August of 2026, north of 90% of public web servers utilize Unix (the base operating system for Linux) as their operating system. However, very few games have direct support for Unix operating systems, leaving Stadia with the problem of trying to support enough games to add true value to their service.
The XBOX Reset can also largely be traced back to XBOX failing to provide enough content for Game Pass. It simply wasn’t and still isn’t a great deal for many gamers who would consider subscribing. XBOX doesn’t have a lot of shiny exclusives to lure gamers to Game Pass with, and that has led to numbers that don’t hit the mark and less-than-satisfactory revenue from the service.
Monetization Is a Problem: Video games are a far more expensive medium than film. Nobody is buying even the latest and greatest movie for $80. And $80 isn’t a number we’ve simply landed on with no rhyme or reason behind it. Simply put, games are expensive, and that’s not changing. It would make sense that any deals that a subscription service would make with game publishers would also be expensive. While I don’t know those numbers myself, I have to assume services like Stadia were and are paying top dollar to have games on their service. The infrastructure to support streaming games or serving games to download is also far more expensive than it is for film and television because of the size of games and, in the case of cloud gaming, the server specifications required in order to run a game and communicate with a player for input. This inflated cost needs to be passed down to the consumer somehow.
However, the consumer is not accustomed to spending inflated prices on their streaming services. A brand-new, blockbuster movie on something like Amazon Prime Video will likely run you $20 to purchase it (well, to purchase a license to view it, but that’s a separate issue). Now let’s look at the cost of a Netflix subscription. We’ll use the Premium subscription to avoid ads and permit 4K streaming since gamers like to play in as many Ks as technologically possible, no matter how expensive it is. That subscription is $27 per month. If we do a quick and dirty conversion using napkin math that considers the latest and greatest game to be $80 on launch, that would proportionally bring the service cost to $108 per month.
Nobody is paying that. In fact, nobody’s going to pay much more than they would for Netflix for a gaming subscription.
It Takes a Special Kind of Company: Gaming subscription services are different kinds of beasts. With the problems related to monetization, it’s best if a company utilizes its own resources to make its own games that it doesn’t have to license. If you can spend a lot of upfront money to make an amazing game and then reap the rewards with subscriptions in the long run to turn a profit on it, you never are at risk for losing that profit to licensing agreements. This means a company has to have a lot of money to spend on either creating these games or licensing them long-term. Only so many companies in the world have that kind of capital.
Such a company then needs to have firm foundations in technology. Not just any company has the infrastructure to support a subscription service or, again, the money to put up such an infrastructure.
This makes Netflix a great candidate, right? They are swimming in money. While they don’t reach the heights of companies like Microsoft, Google, Sony, or Amazon, they certainly have money to throw around. They also have the perfect infrastructure to attempt something like this since it’s already set up as a streaming service. Well, it’s missing the one important bit that Google was missing when they tried Stadia and Amazon is currently missing when trying their gaming ventures.
The company has to know the video game business. Without knowing the business and its consumers, nothing else truly matters. Content is king, and if you don’t know what kind of content belongs in the video game industry at the time you’re trying to compete in it, you’re going to get lost fast and ultimately forgotten about.
Stadia had the money and reach, but Google didn’t have the knowledge of the industry or the corresponding content to keep it afloat. XBOX is actively flailing to keep Game Pass alive and well because it had the industry knowledge, had the money, had the technology, and failed to deliver on the content pipeline. PlayStation Plus continues to survive because it has all three of these, but that’s strictly a first-party platform that hasn’t and probably will never be a mainstream hit that delivers on the level of something like Netflix does for its movies and shows.
So What About Netflix?
Netflix, much like Google, has everything except for the knowledge of the industry, and that lack of knowledge is leading rapidly to its downfall. Content is king. However, it has shown over the course of the past five years that it can’t sustainably produce that content. To reiterate, it started or acquired seven studios, and it closed or sold off five of them already. Two of those studios never released anything at all. Netflix has a content problem.
However, I think what’s truly going to bite Netflix in the end is the monetization. How is Netflix going to monetize in a way that keeps their gaming arm of the company afloat? As of today, Netflix gaming is just something that anybody gets with their Netflix subscription, and if you have either of the plans that don’t have ads, those games aren’t pulling in any extra money once they’re on Netflix. That means the games need to translate into some form of additional subscribers in order to pay for itself. Unless Netflix is able to convince developers/publishers that they should pay to have their games on Netflix (spoiler alert: Nobody is doing that).
Based on their recent statements following the closure of Night School Studio and Moonloot, it seems to me that Netflix has recognized this and is shifting primary focus to the mobile gaming market. That will likely mean that Netflix’s game offerings come with more ads and more microtransactions. I think this is a smart move that could keep Netflix gaming afloat for a while longer, but it’s also a move that will doom Netflix’s gaming assets to obscurity in the gaming community. Netflix clearly bit off more than they could chew in the gaming industry, and while they’re not backing down without a fight, I feel the writing is already on the wall.