Netflix Views Warner Bros. Games as Lacking Value
The news of Netflix’s interest in acquiring Warner Bros. didn’t seem promising for gamers, but recent comments from the streaming giant’s co-CEO, Gregory Peters, indicate that the situation might be even more dire than we thought. During an investor call, Peters revealed that Warner’s gaming division was not even considered in the $83 billion deal, as it was deemed to hold little value, being “relatively minor compared to the grand scheme of things.”
Warner Bros. Games has faced its share of challenges, including the closure of several talented teams and the disappointing performance of titles like MultiVersus and Suicide Squad: Kill the Justice League. However, it’s far from insignificant. Hogwarts Legacy emerged as the best-selling game of 2023 in the U.S., surpassing even Call of Duty with 34 million copies sold in its first year, generating billions in revenue. The Arkham franchise, Mortal Kombat, and the lucrative Lego games spanning from Star Wars to Harry Potter to Batman also contribute to its value. While the gaming division has struggled under David Zaslav’s leadership, it’s hard to dismiss it as worthless, yet that’s the valuation Netflix placed on it during the acquisition talks.
Peters noted, “While they definitely have been doing some great work in the game space, we actually didn’t attribute any value to that from the get-go because they’re relatively minor compared to the grand scheme of things.”
This perspective is crucial to understand. Netflix has spent years trying to monetize video games, facing repeated failures and scaling back its ambitions from PC and console gaming to a focus on mobile games with a casual approach. This shift makes sense, as Netflix is primarily a streaming service, and it was overly ambitious to dive into a gaming market that had recently seen Google exit spectacularly. Major companies often look at the revenue generated by titles like Call of Duty or Genshin Impact and think they can replicate that success, but the reality is that millions can be wasted, leading to job losses.
In light of this, Netflix’s pursuit of Warner Bros. can be seen as a reflection of its disillusionment with the gaming sector, which may explain its lack of interest in the gaming division. However, this also reveals a significant oversight, considering the profitability of many of Warner Bros. Games’ franchises.
This situation suggests tough times ahead for the developers still working under Warner’s banner. Peters’ comments hint at some internal insights, as he expressed excitement about properties like Hogwarts, which have performed well, and suggested potential integration into Netflix’s offerings. However, the phrase “what we’re offering” is critical, especially given Netflix’s recent focus on mobile gaming. Peters acknowledged the talent within Warner’s studios, stating, “They’ve got great studios and great folks working there,” but reiterated that this potential hasn’t been factored into their deal model.
It makes sense to view the IPs Netflix would acquire as opportunities for casual gaming development. The Lego games are already suited for mobile play and appeal to a wide family audience, while franchises like Harry Potter and Batman could easily be turned into a stream of mediocre mobile games. However, hopes for new entries in Rocksteady’s Arkham series seem slim, and the revival of beloved franchises like Shadow of Mordor, FEAR, and other neglected Monolith properties appears unlikely under the new ownership.
