Can Netflix reclaim the ‘Netflix for games’ crown from Xbox Game Pass?

Netflix wants to try where Google Stadia failed.

Just a few weeks ago, Google publicly retreated from cloud gaming with the surprise announcement that it would be shutting down Stadia. By throwing in the towel, it seemed like Microsoft, which has made cloud gaming a perk but not its primary focus for Xbox, has the best chance at popular adoption, as it’s probably the closest thing to a “Netflix for video games” that we have so far. Amazon’s Luna doesn’t seem to be a big hit, and most people don’t seem aware of Nvidia’s GeForce Now.

This week, the future of game streaming got a lot more interesting: Netflix, the company that proved that movie streaming was the future, announced that it’s “seriously exploring” a cloud gaming service of its own. It’s got its work cut out.

Netflix has already demonstrated it can capably run a content streaming business for movies and TV shows at scale for hundreds of millions of customers. But making the jump from the handful of mobile games it currently offers to a full-on cloud gaming service will be a “long, tough, danger-filled road,” according to Lewis Ward, IDC’s research director of gaming, esports, and VR / AR.

The risk might be worth it because cloud gaming would immediately open up Netflix’s gaming strategy in a big way: the company could theoretically offer games on every screen where you watch Netflix. By this point, you’ve probably heard something like that pitch a few times, but Netflix doesn’t seem to be interested in a standalone service. Based on comments from the company’s gaming boss, Mike Verdu, it seems as if it will be leaning more toward Xbox’s actually successful version of cloud gaming. “For us, delivering games to your TV or to your PC [is] value add,” he said at TechCrunch Disrupt on Tuesday. “We’re not asking you to subscribe as a console replacement. So it’s a completely different business model.”

That’s different from Stadia, a standalone service that relied on a fractured business model that offered both full-price games and a subscription that only gave you access to select titles. Rebecca Ann Heineman, whose studio Olde Sküül was working on a Stadia game before the shutdown announcement, believes that model contributed to the failure of the platform. “Everyone I know, including myself, thought for one monthly price, you could play all the games you want for free,” she said in an email. “This was not the case with Stadia, and due to reality not meeting the perceived expectations, it really hurt Stadia.” If Netflix keeps cloud games as part of its “all you can eat”-style pricing, the company could get it right, she said.

But right now, it feels like it’s a lot easier to get cloud gaming wrong than right.

One hurdle Netflix will have to overcome is building a strong technical infrastructure for cloud gaming. Streaming games is a “different animal” than streaming movies and TV shows, Joost van Dreunen, an adjunct assistant professor at the NYU Stern School of Business, said in an interview. Netflix’s backend is based largely on Amazon Web Services, which isn’t ideal for streaming gaming, especially for multiplayer games, according to van Dreunen. Huge studios like Roblox and League of Legends developer Riot Games have built out their own technological backbone to reduce latency and create better experiences, and Netflix would need to make a similar commitment to its infrastructure for cloud gaming.

Another problem is that US broadband infrastructure is still largely terrible for cloud gaming, with many experiencing slow download speeds or frustrating monthly data caps. Netflix is keenly aware of this; it operates the fast.com speed-checking tool that’s useful to turn to when your internet unexpectedly slows down and you suddenly can’t watch a movie. And Microsoft, which also has a vested interest in better broadband access for its cloud gaming offerings, maintains a dashboard that shows just how bad digital inequity can be across the country. For example, in one county in Washington state, 97 percent of the county isn’t using the internet at broadband speeds, according to Microsoft. (The FCC defines broadband speeds as a 25Mbps download speed.) Unreliable internet makes cloud-streamed games laggy and difficult to play, and it’s hard to make a compelling case for cloud gaming if it’s difficult to know if your internet can handle a game in the first place.

Internet infrastructure won’t be the only thorn in Netflix’s side, as Apple’s App Store will be a major issue. Apple has complex rules…