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Netflix and TikTok are betting on gaming to secure their future

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The streaming wars are warming up. In March, Disney set the release date of Obi-Wan Kenobi until May 27 to coincide with Netflix’s launch top show, Stranger Things. This is on the back of Google’s announcement that YouTube had Shorts matched TikTok’s 1.5 billion subscribers in the short video market.

Faced with increasing competition, declining subscriber numbers, and loss of content, Netflix and TikTok need to diversify. And for this they turn to games. With more than three billion players worldwide and an estimated market share of $200 billion, the gaming industry is both popular and lucrative

Netflix introduced mobile gaming last year for all its subscribers. This included two notable Stranger Things pairings. Meanwhile, TikTok has been offering games to select users since 2019 and it seems very likely to do so extend this offer

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Both Netflix and TikTok have transformed the entertainment business.

They appear diametrically opposed to each other on the surface† The first earns revenue from subscriptions and spends millions of dollars on licensing or creating content. The latter makes money by linking viewers to advertisers, using streaming “influencers” who have mastered the art of short video.

However, the two platforms share some key features. Both of them:

  1. deliver video content over the internet
  2. strive to constantly grow their user base
  3. take advantage of unique and original content
  4. collect and use user data to improve their services, and
  5. face significant and increasing competition from other companies and entertainment media.

Many beloved movies and television series are departing Netflix for competing platforms. At the same time, TikTok also loses short video influencers to others platforms† Both platforms are looking for new strategies for subscriber retention, growth and original content.

This is where gaming comes in. According to a Consumer Insights report, 79% of the global population online engages in games in one form or another. And millennials rate gaming as the most popular or the second most popular entertainment activity — after watching other people play games on video platforms.

Why is gaming an attractive space?

Games typically offer longer engagement periods than series or movies. This is due to the psychological principles of motivation that underlie most gameplay.

People who have invested in games will often look for additional story (or “lore”) in the form of shows and movies. Alternatively, audiences invested in shows can also watch video games to provide alternative storytelling and world-building opportunities. So shows lead customers to games, and games keep them engaged between seasonal releases.

This technique of telling a story across multiple platforms and formats is known as “tell transmedia stories” and is used with great success by broadcasters, social media and gaming companies. This is what platforms rely on to keep audiences locked in their entertainment ecosystems.

Content creation has has exploded since the pandemic, and a younger audience is spending more time than ever watching user-generated content online. They are specially tailored for games like Crab Game (a fan-made version of the hit Netflix show Squid Game) – which also has millions of viewing hours on the streaming service Twitch.

The Rise of Minecraft as a Popular “Modding” game (in which players can collectively transform the game space through their own customizations) has also helped with video streaming and subscription services. Minecraft related videos have been over streamed a billion times on YouTube

Transmedia’s success opens up additional opportunities for businesses looking to leverage their licensed or original copyrighted content.