Netflix & Amazon: Gaming and the New Fronts of the Streaming Wars
Last week, Amazon once again went to Hollywood and the industry jumped at the chance to think about the implications for the “Streaming Wars” raging between industry giants such as Amazon, HBO, Netflix, Disney, etc.
Boring. As much as I love tech giants battling it out, the more interesting war is formulating on the horizon.
The stage has certainly been set for disruption. 2020 was collectively not a great year for just about anyone on most measures aside from raw home entertainment content consumed, often in the form of over the top (OTT) streaming. Though this so-called “Streaming War” had been raging for years at this point, things hit a particularly frenzied pace when millions of consumers found themselves stuck at home and bored. Sacred cows in the movie and TV industry were suddenly finding themselves on the butcher's block, including releasing feature length films via a streaming service same day (or in lieu of) a theater release (much to the chagrin of theater mainstays such as AMC).
Against this backdrop, with a larger than usual number of consumer viewing hours on the line, the news of Amazon adding depth to their roster of offering on Prime Video via the acquisition of MGM seems like a sensible move in this multi-participant game. Acquisitions at eye-watering amounts of money are interesting in their own right, but in my mind this news is doubly interesting when compared in juxtaposition to news (or maybe better couched as speculation) around one of their streaming competitors: Specifically, Netflix, and their alleged ambitions in gaming.
Two tech titans seemingly going with two very different strategies. I obviously couldn’t be more biased, but despite the headline-grabbing amounts that Amazon paid I believe that the Netflix “non-news” is much more significant. The Streaming Wars didn’t just hit an accelerated pace, but rather the lines of battle may have been redrawn.
When we open up the discussion beyond the mainstream conception of “video streaming” it no longer feels appropriate to merely describe these entities trading blows in a “Streaming War” as that implies that video content will be the default home entertainment choice for consumers. More accurately, it’s a battle for attention centered and pumped directly into the living room of consumers via an increasingly sophisticated network of high speed internet and differentiated offerings, including gaming and streaming video content – it’s a “Battle for Bandwidth.”
The potential difference in these directions speaks to different strategic goals of these services. Prime Video, in the most cynical take from someone known for rather cynical takes, is in some respects merely a perk to ensure consumer shopping stays in Amazon’s ecosystem. Like a profoundly up-leveled version of the infamous Costco hotdog, adding a ~100 year old entertainment company where the crown jewel is a ~60 year old spy movie franchise, is yet another hook to pull you in the (mostly virtual) door.
In comparison, Netflix is solely in the business of entertainment. There is naturally a top-limit to how deeply they can dive in consumer’s wallets in this respect, not to mention a critical threshold of when you get to the point of pretty much everyone subscribing to your service. A good problem to have, but nonetheless a problem for which Wall Street gave them a thrashing. When you combine this outlook with the fact that they’ve gone on record saying that they do not in fact look at other “Streaming Wars'' participants as their primary competitor, but rather games like Fornite, and the rumors of them getting into gaming seem to make quite a bit of sense.
I bring up this now two-year-old quote with extreme trepidation as it’s one of the most annoyingly over-cited factoids in the gaming business world (which seemingly always looks to attention from “mainstream” entertainment for validation), but it has the unfortunate property of being true. Netflix did not become a phenomenon by looking at its competitor set from the start (RIP Blockbuster), but rather with eyes towards the future intersection of consumer habits and technology. Gaming is currently very squarely at the center of this intersection.
What form Netflix takes when “getting into gaming” is anyone’s guess. Will it be a literal “Netflix of gaming” where games can be rented or played for free? This is a tricky proposition laden with complexities that are somewhat unique to the business of gaming (a topic I will not do justice to here but one where you can’t find a better reference than Joost Van Druen’s excellent book One Up). Will it be a Google Stadia-esque proposition that allows you to play CPU and GPU-intensive “AAA” games without “AAA” hardware (ala a gaming PC, console, etc.)? Is Netflix simply getting into the business of producing games ala a games studio sitting alongside its movie studios? Some combination of the above?
The potential directions are fascinating, but one cannot help but think of the rather…uneven history of big tech in gaming. One need not search hard for the potential missteps awaiting this endeavor for Netflix, though it should be noted that some of the more egregious examples can be attributed to organizations where the content was never really the point, so much as what the content meant to larger strategic play (Stadia and Google Cloud, Amazon Game Studios and Twitch, etc.).
Netflix is a company in the business of innovative content distribution and recommendation, but it’s ultimately a provider of content. Putting aside cynicism for a moment, Netflix has already been progressive in its view of gaming IP crossing over into traditional TV shows: The Witcher (yes, I know this is technically modeled on the book, but let’s be real), Castlevania, and reportedly many more to come. Thinking in the opposite direction, the Netflix original “Bandersnatch” demonstrated that TV content could be cast as interactive entertainment. The potential for true cross-IP integrations for gaming, video, and everything in between are manifold.
So, there is a world where Netflix may be the tech company primed to crack into gaming…though it’s just as likely they might be the newest cautionary tale in gaming. Time will tell, though it is inevitable that the entertainment ecosystem is becoming more intermingled across “traditional” and “interactive” entertainment. The extent to which one believes this is inevitable will likely speak to whether one found the recent news around Amazon or Netflix more interesting and/or strategic, but I certainly know which moves I’m watching. The “Streaming Wars” might have just notched one of its biggest maneuvers yet, but the “Battle for Bandwidth” is just starting to heat up.