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

June 23, 2022

This article was co-authored by Bond University Professor James Birt and Dr Darren Paul Fisher and originally published in Conversation.

It war streaming is heating up. In March, Disney postponed the release date Obi-Wan Kenobi until May 27 to coincide with the launch of Netflix top show, Foreign object. This is behind the Google announcement owned by YouTube Shorts equals 1.5 billion TikTok subscribers in the short form video market.

Facing increasingly fierce competition, decrease in number of customers and the loss of content, Netflix and TikTok will have to diversify. And for this they turn to the game. With over three billion players worldwide, and an estimated market share of US$200 billion, the gaming industry is both popular and profitable.

Netflix introduced last year’s mobile game for all its customers. This includes the two famous Stranger Things bonds. Meanwhile, TikTok has been offering games to select users since 2019 and it seems very likely to be expand this offer.

Retain existing customers

Both Netflix and TikTok have transformed the entertainment business.

They appear diametrically opposite on the surface. The former earns revenue from subscriptions, and spends millions of dollars 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.

However, both platforms share some key characteristics. They both:

  1. sending video content over the internet
  2. aim to continue to grow their user base
  3. benefit from unique and original content
  4. collect user data and use it to improve their services, and
  5. face considerable and increasing competition from other companies and entertainment media.

Many films and television series that are very popular are leave Netflix for competing platforms. At the same time, TikTok is also losing short-form video influencers to others platform. Both platforms are looking for new strategies for customer retention, growth, and original content.

This is where the game comes in. According to one consumer insight report, 79% of the world’s online population engage with the game in several forms. And millennials rate gaming as the most popular or second most popular entertainment activity – after watching other people play games on video platforms.

Why is gaming an interesting space?

Games usually provide a longer engagement period than series or movies. This is because psychological motivation principle which supports most of the gameplay.

People who invest in games will often seek additional narrative (or “knowledge”) in the form of shows and films. Alternatively, audiences who are invested in the show can also view video games to provide alternative narratives and world-building opportunities. So events direct subscribers to games, and games keep them engaged between season releases.

This technique of storytelling across multiple platforms and formats is known as “storytelling transmedia” and has been used with great success by broadcasting, social media, and gaming companies. This is what platforms are risking to keep viewers locked in their entertainment ecosystem.

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

The emergence of Minecraft as a popular one game “modification” (where players can collectively change the game room through their own modifications) have also helped with video streaming and subscription services. Minecraft related videos have been streamed over a trillion times on YouTube.

Transmedia’s success provides additional avenues for companies looking to take advantage of their copyrighted licensed or original content.

Intellectual property and data analytics

We know that games increase attention, motivation, emotion and sociability among players.

Companies like the game hosting platform Steam have shown user data can affect creation of new content by game developers. In fact, this is a market advantage that Netflix and TikTok have over their competitors.

For example, one could easily imagine that a popular character in a game, as revealed through game data, would also be more likely to be featured in future events based on that game.

Netflix and TikTok could lose big

When we talk about streaming wars and greater competition, it’s not an equal playing field. There are important differences between Netflix and TikTok, and other players like Disney+, Amazon Prime, Apple TV, and YouTube.

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

For these companies, video streaming and hosting are small side businesses that provide useful data to feed larger machines. So in the “streaming war” they have little to lose, because they can run this side business at a loss.

Netflix and TikTok are not so lucky. By turning to the game, they achieve the lifeline they really need.

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