Analysis from investment bank Berenberg says that video games’ share of consumer entertainment time and budget continues to grow. Duel console ownership, frequency of digital content purchases and time spent playing games are all up compared to 2020 and meaningfully above 2019.
The analysis suggests that Netflix’s ambitions in the sector will, in the short term, use games to add value to its current services to decrease churn, increase retention and drive ARPU inflation. Longer term, Netflix hopes to grow video games into their own separate revenue stream. Netflix is focusing on mobile gaming and will seek to both develop original IP and license third-party IP.
“In November, Activision Blizzard and EA both released the latest iteration of their Call of Duty (CoD) and Battlefield franchises,” says Berenberg. “Both titles have received muted critical reception, with Metacritic scores well below previous titles and weak initial sales data. The new CoD Warzone map and a substantial update for Battlefield in December are important catalysts to improve player engagement.”
The bank also highlights that US consumer spending on video games remains robust, noting: “According to Facteus data, US consumer spending on video games grew 15 per cent in November 2021, continuing the strong trend with spend up 26 per cent y-o-y in October and 11 per cent in Q3 2021.”