Netflix is adding more games to its library, Microsoft gaming revenues will likely exceed Sony’s, and more games market news

Welcome to our weekly analysis roundup. Our experts dive into the latest gaming trends and games industry news every week on our Platform’s Analyst Feed.

This week, our analysts have highlighted:

• Microsoft’s gaming revenues will likely exceed Sony’s for the first time since Newzoo started tracking, thanks partly to the Activision Blizzard acquisition.
• Netflix has added an array of well-known indies to its service to raise gaming engagement among its subscribers.
• Take-Two Interactive’s CEO said game prices are “very, very low because we offer many hours of engagement,” and gaming journalists widely misinterpreted the statement.

Let’s get into these gaming trends.

Microsoft’s gaming revenues will likely be higher than Sony’s for the first time

In the recent update to our Global Games Market Report, we looked at the top 25 companies by game revenues in the first half of 2023.

Tencent and Sony took the top spots, as usual. However, that likely won’t be the case going forward, thanks to Microsoft’s acquisition of Activision Blizzard. Microsoft’s H1 2023 game software revenues exceeded Sony’s (when we include Activision Blizzard).

Sony will likely drop to the #3 company going forward. This is the first time this has happened since we started tracking and estimating these revenues.

In total, the top 10 public game publishers generated revenues of $54.4 billion in H1 2023. That represents almost 30% of this year’s games market’s revenues (according to our 2023 forecast).

Netflix has added many new indies to its games library

Netflix is continuing to add well-known content to its game library. Along with transmedia titles like Stranger Things 3: The Game, Netflix has added more third-party indie hits.

The streaming giant has previously experimented with high-profile third-party indies. Netflix added Subset Games’ Into the Breach last year and Motion Twin’s Dead Cells this Halloween.

Now, Netflix is bringing various new games to its subscription service, including Hades, Braid, and Death’s Door. It will also add games based on its IP (Money Heist) and titles from its acquired studios (Oxenfree II).

Despite its evolving roster of respected titles, Netflix has seen significant subscriber engagement with its games so far. Since announcing games as a vertical two years ago, Netflix has tripled the number of games available in its library. However, fewer than 1% of the service’s over 247 million subscribers play a game daily. These games are also only playable on mobile.

Netflix faces an uphill climb in mastering the gaming vertical as things stand. Still, its gaming journey has promise, with an expanding library of quality games, plans to develop AAA games internally, and aspirations to expand cloud gaming. This is a gaming trend we’re definitely going to follow closely.

Take-Two Interactive’s CEO says game prices are “very, very low because we offer many hours of engagement”

Last week, several games journalists misinterpreted statements from Take-Two’s CEO Strauss Zelnick, printing headlines mistakenly claiming that he said games should be priced hourly.

The press was responding to how Zelnick answered an investor question regarding game pricing. Here’s the original statement:

“In terms of our pricing for any entertainment property, basically, the algorithm is the value of the expected entertainment usage, which is to say the per-hour value times the number of expected hours plus the terminal value that’s perceived by the customer in ownership if the title is owned rather than rented or subscribed to.’’

“Our frontline prices are still very, very low because we offer many hours of engagement. The value of the engagement is very high. So, I think the industry … offers a terrific price-to-value opportunity for consumers. That doesn’t mean that the industry has pricing power or wants to have pricing power.”

While some members of the press thought Zelnick was advocating for a cost-per-hour gaming model, it seems the Take-Two boss was simply pointing out the high value of gaming.

He claimed that Take-Two “wants to make sure the experience is first-class, and the nature of the experience is not just the quality of what we offer, it’s also what you pay for it.”

Zelnick’s misinterpreted remarks come amidst a longstanding rise in AAA development costs.

In the ’90s, consumers could buy a AAA console game for $50 (and the equivalent across different markets). In 2005, development costs and economic turbulence galvanized publishers to raise that price to $60. Consumers in 2023 can expect to pay $70 for AAA games.

Of course, while prices have increased (relatively less than other consumer products), games have also gotten longer. This means that Zelnick’s idea that games offer good value for money is not so off base.

One of the first games that may test consumer’s willingness to spend more money is the upcoming Grand Theft Auto VI. The highly anticipated title could cost more than $70, but its mega-hyped consumers would likely be able to bear such a price. If any franchise could help usher in a new average AAA price, it’s Rockstar’s landmark title.

The most complete view of the games market awaits you

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