Netflix Closes AAA Video Game Studio, Announces Shutdown

Despite the ongoing enthusiasm among top executives for the potential of video games, Netflix has made the decision to close its AAA game studio located in Southern California. This move, initially disclosed by GameFile and later confirmed by a source familiar with the situation to Deadline, marks the end of AAA among the small studios that Netflix had brought under its corporate umbrella in recent years. Regrettably, the studio had not released any titles before its closure.

When approached for comment by Deadline, a representative from Netflix declined to provide any additional information regarding the closure. Netflix had been actively working to integrate games into its offerings alongside series and films as a means to attract and retain subscribers. However, the production and marketing costs associated with creating a successful video game can be substantial. As a result, Netflix has been focusing on streamlining and reducing expenses across various business sectors.

The decision to shut down the AAA studio comes shortly after Alain Tascan, a former executive at Epic Games, was appointed as the president of Netflix’s games division. Tascan succeeded Mike Verdu, who transitioned to a role concentrating on technology innovation and gaming. Tascan, with a background that includes co-founding Ubisoft and establishing a Montreal studio for Electronic Arts, brings a wealth of experience to the position.

Notably, three key executives who had joined AAA in the past two years, with ties to popular franchises such as Overwatch, Halo, and God of War, have departed from the company. During a recent earnings call, Netflix Co-CEO Greg Peters emphasized that investments in video games and other ventures are akin to "planting seeds" that are expected to enhance the entertainment offerings of the platform. By introducing games based on Netflix intellectual properties and classic game titles like Monument Valley 3, Netflix aims to bolster subscriber growth and retention.

Co-CEO Ted Sarandos underscored the importance of games in the overall content production strategy, stating that the goal is to consistently offer a diverse range of high-quality TV shows, films, and games for members to enjoy throughout the year. The closure of the AAA studio reflects Netflix’s evolving approach to its gaming initiatives and its commitment to refining its business operations to adapt to changing market dynamics.