Video streaming giant Netflix has closed its elite game development studio in Southern California.
A company spokesperson confirmed the news on Oct. 22 but declined The Epoch Times’ request for comment.
First reported by gaming journalist Stephen Totilo, Netflix is shifting away from the pursuit of a so-called “AAA” premium game that could cost hundreds of millions of dollars and years of development to create.
“Definitely a sign of new leaders pulling back from one big bet, but Netflix still has a bunch more studios and [executives] seem hyped on growth targets and show tie-in games,” Totilo wrote in an Oct. 21 X post.
Netflix ventured into the gaming industry in 2021 with the acquisition of studios and the establishment of a development team in Southern California.
Dubbed “Team Blue,” the group was led by high-profile developers—including Chacko Sonny of the game “Overwatch” and Joe Staten of “Halo”—and was tasked with creating a best-selling game.
No mention was made of the team or the decision to disband it in an earnings call on Oct. 17.
Executives briefly mentioned games as one of the company’s core priorities.
“We’ve got initiatives like games. We’re excited about games based on Netflix” productions, Gregory Peters, the company’s co-CEO, said during the call.
Peters said new games related to Netflix shows—including “Squid Game,” “Virgin River Christmas,” and “The Ultimatum”—were in the works.
More than 80 mobile games are currently available to Netflix subscribers. The company also offers 10 games to play on televisions and web browsers as part of a beta release that utilizes an app designed by the firm that turns a mobile device into a gaming controller.
While it is unclear how the studio’s closure will impact the plans, the company’s other studios and assets could continue working on those and other related projects.
Peters said expanding advertising and access to live programming are other priorities to help grow revenues.
He highlighted the upcoming fight between Mike Tyson and Jake Paul, National Football League games, and World Wrestling Entertainment productions starting next year as opportunities to increase the number of subscribers by attracting new watchers.
“I think it’s also worth noting that we’ve got a lot on our plate right now. We’ve got a lot of hard work building new capabilities,” Peters said. “And before we’re taking on anything new, let’s take care of that.”
During the call, he noted the long-term nature of the plans.
“Our second set of priorities are about planting seeds, these investments and new initiatives that help us expand and strengthen our entertainment offering and that we believe will be incremental levers for growth in the coming years,” Peters said. “It takes time to build these new initiatives to the point where they’re significant given that we already have a fairly large core business.”
A fellow executive said the company is working to improve its offerings by combining access to an increasingly large selection of various forms of media.
“What we’re focused on is adding more and more value to this package, amazing series and films and now games at a remarkably low price all in one place,” Theodore Sarandos, co-CEO, said in the earnings call. “So, we are really betting on our ability to reach consumers and on our ability to continue to grow [the] value of this package.”
In a job posting earlier this year for its games studio, Netflix said it was searching for teammates who are “energized by the learning that comes with bold experimentation at an agile pace.”
“We’re a small, scrappy team with big ambitions, and an obsession to deliver memorable game moments that leave players telling their own stories for years to come,” the ad reads.
Netflix still has its Next Games studio in Helsinki, Finland, among others.
Google also briefly attempted a foray into the gaming industry with its Stadia cloud gaming venture that launched in November 2019 before it was abandoned in January 2023.
