Levelling up: why Netflix and TikTok are turning to gaming to secure their future

 

Levelling up: why Netflix and TikTok are turning to gaming to secure their future

The streaming wars are heating up. In March, Disney delayed the release date of Obi-Wan Kenobi to May 27 to coincide with the launch of Netflix’s top show, Stranger Things. This on the back of Google’s announcement YouTube Shorts had matched TikTok’s 1.5 billion subscribers in the short-form video market.

Facing increased competition, falling subscriber numbers and loss of content, Netflix and TikTok are having to diversify. And for this they’re turning to games. With more than three billion players worldwide, and an estimated market share of US$200 billion, the gaming industry is both popular and lucrative.

Netflix introduced mobile gaming last year for all its subscribers. This included two notable Stranger Things tie-ins. Meanwhile, TikTok has offered games to select users since 2019 and seems very likely to expand these offerings.

Retaining existing subscribers

Both Netflix and TikTok have transformed the entertainment business.

They appear diametrically opposed on the surface. The former gets revenue from subscriptions, and spends millions of dollars on licensing or creating content. The latter makes money by linking viewers to advertisers, with the help of streaming “influencers” who have mastered the art of short-form video.

Content creation has boomed since the pandemic, and younger audiences are spending more time than ever watching user-generated content online. They have been particularly tuned into games such as Crab Game (a fan-made version of the popular Netflix show Squid Game) – which also has millions of view hours on the streaming service Twitch.

The rise of Minecraft as a popular “modding” game (in which players can collectively transform the game space through their own modifications) has also helped video streaming and subscription services. Minecraft-related videos have been streamed more than one trillion times on YouTube.

Transmedia success provides additional avenues for companies looking to leverage their licensed or original copyrighted content.

Netflix and TikTok can lose big

When we speak of the streaming wars and greater competition, it’s not a level playing field. There are crucial differences between Netflix and TikTok, and other players such as Disney+, Amazon Prime, Apple TV and YouTube.

Netflix is in the streaming business, and TikTok in the video-hosting industry. On the other hand, based on revenue Disney is in the theme park and toy business, Amazon the online sales industry, Apple the computing and phone industry, and Google in the search and advertising industry.

For these companies, streaming and video hosting is a small side business that provides useful data to feed a greater machine. So in the “streaming wars” they don’t have as much to lose, as they can run these side businesses at a loss.

Netflix and TikTok aren’t so lucky. By turning to games, they’re grabbing onto a lifeline they really need.