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Netflix’s early efforts to create a business out of mobile gaming are hitting a rough patch.
The company began offering mobile games based on its hit shows like “Stranger Things” or “The Queen’s Gambit” last November. Since then it’s had a difficult time getting its subscriber base to play the 26 titles currently available.
Less than 1% of Netflix’s subscribers are playing its games, according to an Aug. 6 report from CNBC. That’s based on data from Apptopia, a third-party site which tracks the usage and growth of mobile apps. According to Apptopia, Netflix games average 1.7 million daily active users. That might not sound shabby, but compared to the streamer’s 221 million-strong subscriber base across the globe, it’s peanuts.
Netflix declined to share daily active users statistics with dot.LA. According to mobile app tracking database Sensor Tower, Netflix’s top two downloaded games are, predictably, both based on “Stranger Things.”
“NETFLIX Stranger Things: 1984” had 600,000 downloads last month, Sensor Tower reports, while “Stranger Things 3: O Jogo” was downloaded a half million times. Sensor Tower reports Netflix’s games saw 12 million downloads overall last month, but estimated most of those downloads only generated less than $5,000 in revenue.
Sensor Tower reported Netflix’s mobile app revenue last month was $22 million; though it’s crucial to note that includes its flagship Netflix streaming app, which likely accounts for the bulk of its app-based profits.
A large gap is noticeable when comparing Netflix’s recent stats to some of the top local mobile game publishers that have been putting out games for over a decade, like Culver City’s Jam City games or Scopely. Per Sensor Tower, all of Jam City’s games were downloaded a total of 2 million times last month, but the company squeezed $21 million in revenue out of them. Scopely, meanwhile, had only 800,000 downloads in July—yet those brought in revenues of $54 million.
Perhaps the moral of the story for Netflix is less is more: Instead of pushing ahead with a wide-ranging slate of mobile games that can’t capture audiences – crucially, audiences willing to pay for microtransactions that generate revenue from otherwise free phone games – it might find more success with a breakout hit or two that it can iterate on for generations, like Scopely’s “Marvel Strike Force,” which launched in 2018 and raked in an estimated $9 million alone in June thanks to its play-to-win mechanics.
That said, Netflix’s vice president of games Mike Verdu said during a panel discussion in May that he plans to continue adding more games as part of the streamer’s monthly subscription. Under Verdu’s watch, Netflix will likely keep buying up gaming studios to acquire their content and development teams to push out more “original'' games that will then drive players back to the streamer’s shows in-app.
As Verdu said at the same discussion, “We're not trying to convert you, we're not trying to monetize you—we're trying to give you joy and delight to create an experience that will get you to come back.”
(Disclosure: Jam City and co-founder Josh Yguado are investors in dot.LA).
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In this fireside chat with dot.LA and Pacaso co-founder and chair Spencer Rascoff, Jam City President and co-founder Josh Yguado explores what the acquisition of Ludia means for the future of Jam City and the future of mobile gaming.
Jam City is behind some of the world's most well-known mobile games including several for the "Jurassic Park" and "Harry Potter" franchises, among others. Its recent acquisition of Ludia bolsters its global portfolio of top studios that develop and publish top-grossing games.
Yguado says one of the most important ways to build trust with their brand is by taking care of the fans. The company relies on third-party intellectual property but also makes sure there's a slew of original games coming in.
"If we're creating something that's going to last not a couple years, but five, 10, 15 years. They want someone who's thinking ahead about where gaming is going to be," says Yguado.
People spend more time playing video games than they do watching TV or being on Facebook, according to Yguado. He capitalized on the fact that when people love something like a Marvel movie, they want to spend more time in that world.
As gaming embraces NFTs and other digital collectibles, fans could go beyond collecting digital tokens and in-game items. Soon, players will be investing in their games themselves.
"People are going to be able to collect resources, buy them and sell them, but also use them in ways give them to friends share them, I think, how we transact how we live are going to be driven by NFTs in ways we can't even imagine right now," said Yguado.
Also in this episode, Yguado discusses what it means to be at the intersection of traditional entertainment and mobile gaming and why L.A. is the perfect place for this work.
Want to hear more episodes? Subscribe to Office Hours on Stitcher, Apple Podcasts, Spotify, iHeart Radio or wherever you get your podcasts.
dot.LA Engagement Intern Joshua Letona contributed to this post.
Jam City is a investor in dot.LA.
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At dot.LA's second annual summit, mobile game publisher Jam City's Chief Operating Officer Josh Yguado said he believes the next generation of mobile gaming will enable users to own parts of their favorite games on the blockchain.
"More than anything we're investing in where gaming is going, so we're making huge investments right now in augmented reality and cryptocurrency," Yguado said during the summit's fireside chat Thursday evening. "We've talked about the metaverse a bit today, but we're really thinking about where gaming is going to be two to three years from now."
Culver City-based Jam City was launched in 2011 and has since made a name for itself adapting popular television and movies into games. Its standout titles include "Harry Potter: Hogwarts Mystery," "Jurassic World Alive" and "Cookie Jam." Jam City and Josh Yguado are both investors in dot.LA.
Speaking with dot.LA co-founder and Spencer Rascoff, Yguado said that after more than a decade running Jam City, the mobile gaming giant is looking beyond its roots as a company that develops its own games to one that's focused on acquiring existing game studios and bringing more indie developers under its wing. The one-on-one interview was part of a slate of evening events kicking off the second dot.LA Summit, and was recorded for Rascoff's "Office Hours" podcast.
This September, Jam City paid $165 million to buy out Montreal-based Ludia, which was previously owned by Fremantle Media and developed the "Jurassic World Alive" game. At the same time, Jam City raised a $350 million equity and debt round led by South Korean game publisher Netmarble Games, the company's largest funding round ever. Jam City has raised roughly $625 million since its launch, according to Pitchbook.
Yguado said that Jam City has generated $3 billion in lifetime revenue, driven mainly by in-app purchases since its games are free. He also noted Jam City's games have been installed roughly 1.3 billion times. The next step, he said, is allowing that loyal player base to actually own and trade parts of games as NFTs, or non-fungible tokens, that have the potential to increase in value over time like a physical collectible.
"We think the future is going to be a lot of IP [intellectual property], and some advertising [revenue], but also people actually buying and owning assets. I think that's the next phase of where we're headed," Yguado said. "Now we're entering this next phase, I really believe we're going to have a kind of transition now going toward real ownership in gaming."
Yguado added, "players up till now have been enjoying a world, but it's like playing on a stage, they're not actually investing in creating something that they can share with others."
Yguado told Rascoff that Jam City's research shows that its players spend more time per day engaging with its games than they watch film and TV. But Yguado said the connection to recognizable film or television franchises helps reel in new players. Half of the Jam City games portfolio is original IP, and the other half is based on existing well-known franchises, such as Fox's "Family Guy" or Disney's "Frozen."
"Honestly, we love both [original and acquired IP], what we care most about is the gaming experience," Yguado said. "Whether we're creating the world and the characters or we're licensing them… I'd say we're agnostic in terms of what makes these companies want to work with us."
Note: Jam City is a sponsor of the dot.LA Summit.
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