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Netflix to dive into video games with ad-free mobile gaming at no extra cost

And console games for Xbox and PlayStation may follow.

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- 04:31
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Angela Lang/CNET

Netflix confirmed Tuesday that it'll expand into video games, starting with ad-free games for mobile devices like phones and tablets available on its existing service at no added cost to subscribers. In its biggest expansion into a new kind of entertainment since it started streaming in 2007 and released its first original show in 2012, Netflix sketched out broad ambitions for gaming, indicating it ultimately envisions pursuing console games for Xbox and PlayStation too. 

Netflix was clear about one thing its gaming won't be, at least not at first: a new way to charge you money. 

"We're a one-product company," co-CEO Reed Hastings said Tuesday during a discussion of the company's second-quarter earnings. That product, he noted, is an all-in-one subscription that will include games. 

The move into gaming widens Netflix from its bedrock business of TV shows and movies as the world's biggest subscription video service. As Netflix has grown, it's long pointed out that its competition extends beyond the traditional TV and movie companies that go head-to-head with it now. The company has repeatedly called out gaming phenoms like Fortnite, as well as user-generated-video powerhouse YouTube, as some of its toughest competition because of the massive amount of entertainment hours they command worldwide. 

And the gaming industry is an economic powerhouse. A surge in interest during the pandemic last year bolstered it into a bigger market than movies and North American sports combined. The global market for video games was estimated to be worth nearly $178 billion last year and is expected to eclipse $200 billion in 2023. 

Netflix isn't alone in this gaming expansion. Amazon, which operates Prime Video, has invested in Luna, its cloud gaming service, and has its own gaming studio. Google, parent of YouTube, has put money into its own Stadia game-streaming service. And Apple, which makes its own films and TV shows for Apple TV Plus, also widened into Apple Arcade

But Netflix would be unique by making games part of its one and only subscription. Others offer their gaming services as standalone products, typically also offered in a bundle with a bunch of other memberships.

"We think the time is right to learn more about how our members value games," Netflix said Tuesday.

Consoles, costs and clouds

Mobile games will be Netflix's primary focus, but executives said Tuesday that all the devices that Netflix already supports are candidates for its games. That would include gaming consoles like Xbox and PlayStation, as well as desktop computers and connected TVs. 

On Tuesday, Netflix didn't specify timing of its gaming initiative, noting only that it's in the "early stages" and that it's a "multiyear effort." A Bloomberg report last week said Netflix planned to expand into games within the next year. 

The company said it'll experiment with making games based on existing Netflix franchises so fandoms dive deeper into their favorite stories and characters, but it'll also try standalone games that are wholly original, potentially spawning spinoff shows or movies themselves. And it'll explore making games based on media existing outside Netflix's galaxy -- imagine a Netflix game based on a book series or comic. 

At the outset, Netflix games won't have ads, they won't include in-game purchases and you won't have to buy individual titles. Netflix games will be part of your overall subscription, in the same way that the company started making and streaming horror movies and reality TV shows alongside high-brow drama series as part of same Netflix membership. 

Netflix has one service with multiple tiers, which all access the same catalog but can unlock perks like additional simultaneous streams and better video quality the more you pay. In the US, it has three tiers priced at $9, $14 and $18. In India, it offers a mobile-only plan for roughly $3 a month (199 rupees), and it plans to expand those cheap, mobile plans to more emerging markets.

Netflix didn't specifically define its initiative as cloud gaming. But Netflix, alongside YouTube, is the world's leader in streaming video, with a long track record of doggedly improving the quality of its video streaming even over weaker connections. 

"There's a rich opportunity to continue to deliver and advance the technical capability to improve the quality of game experiences we can deliver across the range of devices," Greg Peters, Netflix's chief operating and product officer, said Tuesday.

Netflix had hinted recently that it was interested in stepping up its pursuit of gaming. The company has flirted with games before, through its interactive, choose-your-own-adventure-style programming like Bandersnatch and through some licensing and merchandising partnerships. But in April, Peters signaled that Netflix's interest in gaming may be advancing. 

"We're trying to figure out what are all these different ways ... we can deepen that fandom, and certainly games are a really interesting component of that," Peters said at the time. "There's no doubt that games are going to be an important form of entertainment and an important modality to deepen that fan experience."

Last week, Netflix confirmed it had hired Mike Verdu, who previously had stints at Oculus, Electronic Arts and Zynga, as vice president of games development.

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