Netflix vs. Amazon: Who Will Win on the Gaming Frontier?

By Riyad Mammadyarov, Senior Associate Strategist, Design Bridge and Partners

Over the last few years, we’ve seen the streaming giants face what was previously unthinkable, at least in their world: customer saturation. After investing billions of dollars annually to create an infinite variety of content to bring more and more viewers into the fold, Netflix, Amazon and their peers have finally reached a plateau of new subscribers. Sure, they may have begun rolling out ad-supported subscription tiers to wring every last drop out of the customer acquisition towel, but that too will soon dry out, leaving investors hungry for more dollar signs.

Enter the last major frontier yet to be claimed and tamed: Gaming.

Having matured to be an industry that makes more money than movies and music combined, gaming has grown up, taking bigger chunks out of the attention span pie. In fact, Gen Z on average plays about 12 hours of video games a week, compared to the roughly 11 hours they spend watching entertainment. And their time spent on the former will likely expand in the coming years and with the coming of age of new generations. This isn’t lost on either Netflix or Amazon, both of which are working feverishly to ensure they have a stake in the gaming ground within in order to maintain both growth and brand relevancy.

Both brands have started developing their gaming capabilities in earnest and invested significant resources, but they’ve gone about it differently. As to who ends up gaining the upper hand—and the larger share of gaming subscribers—will depend on a myriad of factors, most notably dependent on how consumers’ appetites evolve.

Note that when Netflix entered the gaming space two years ago, it adopted a cautious approach which Co-CEO Greg Peters called a “crawl, walk, and run” strategy. This included creating simple mobile games tied to their most successful content, i.e. Stranger Things. But Netflix has since become more ambitious, ramping up production, tripling their library size, creating standalone gaming apps, and bringing on execs from gaming stalwarts like EA and Microsoft. But despite amping up their efforts, most consumers remain unconvinced, with only about 1% of Netflix’s subscriber base engaging with their gaming content—which means a whole lot of potential remains untapped.

It’s clear that the higher ROI mobile gaming space isn’t quite as simple as Netflix had initially thought, particularly as gamers tend to prefer quality over quantity. This is particularly true if Netflix was to explore the cloud gaming approach that they aim to enable via TV and other device-enabled gaming. But given the streamer’s financial patience and proven track record when it comes to introducing new kinds of content to subscribers, it’s a strong possibility that it will remain steadfast in its ambitions toward diversifying revenue streams, creating a more holistic brand experience, and driving up brand engagement across multiple platforms.

Amazon, on the other hand, recognized the opportunity presented by gaming earlier on. With the launch of Amazon Game Studios in the early 2010s (recently rebranded to Amazon Games), Amazon stated its intention was to focus on “creativity” and “craftsmanship,” hiring critically- and commercially-lauded designers and developers from respected studios to help achieve their ambitions. Intentions were good and gamers were excited because their strategy was similar to the category conventions of juggernaut studios. They were relying on the release of triple AAA (gaming speak for high development and marketing budgeted games) to bolster their reputation in the space and gain greater brand loyalty in the long-term.

Remember, Amazon is no stranger to launching verticals that could take years to get off the ground and that has certainly been the case here, including the cancellation of multiple high-profile, multimillion-dollar games coupled with leadership turnover. Nonetheless, Amazon appears to be sticking to the goals it had set out to achieve nearly 10 years ago, as craftsmanship and quality are of prime importance (forgive the pun), as evidenced by their scrapping of games that didn’t pass their quality control standards even after pumping hundreds of millions of dollars and years of resources into them. It’s a smart move, one that ensures that they continue to build brand equity in the gaming industry among consumers and industry insiders alike.

But which brand has the winning formula? Which approach will ultimately pay off in achieving brand loyalty, relevance, and trust—the trifecta?

Netflix’s mobile gaming approach appears to be a play to increase engagement across multiplatform use with the casual gamer, creating a holistic brand experience wherein consumers can enter and exit via multiple channels and avenues. It helps drive business on multiple fronts, but that strategic approach could be seen as a short-term play to drive brand engagement that likely won’t do much toward gaining brand loyalty among core gamers who yearn for top notch quality. Afterall, there’s a reason gaming budgets have been going up and up year-over-year among large publishers—gamers want more and more with each iteration and release and scoff at anything less. So while Netflix might be able to curry favor in the here and now, it will likely not do much to gain significant brand loyalty among dedicated gamers in the years to come.

Meanwhile, Amazon appears to be hedging its bets on building long-term brand equity, recognizing the value in investing in new, standalone IPs that will stand the test of time and begin establishing itself as a bona fide player in the category. It’s certainly a more difficult brand strategy to achieve, but if done right and also lauded by critics, consumers and industry analysts, will certainly herald in a juggernaut into an industry that is already seeing massive consolidation to meet the needs of gamers today, and more importantly, tomorrow.