Netflix said it is in the process of closing two of its gaming studios, as the division is making another round of organizational changes.
The Los Gatos, Calif., streamer said it closed the Hollywood-based gaming studio Night School, the maker of narrative games like “Oxenfree,” on Thursday and has proposed to close Helsinki, Finland-based gaming studio Moonloot. Night School was the first game developer Netflix purchased in 2021 as it expanded into gaming. At the time, the streamer was under pressure by investors to diversify its content to attract more customers, after experiencing two quarters of subscriber losses in 2022.
Night School viewed the acquisition at the time as “such a natural pairing” as the gaming studio wanted to stretch its narrative aspirations on original games and Netflix has a reputation of giving TV and film creators an “unprecedented canvas” to bring entertainment to millions of people, according to a blog post on its website.
In an email, a Netflix spokesperson said it is eliminating roles because the company believes it can operate more strategically and efficiently in its games business. The spokesperson declined to provide the number of workers affected.
Last year, the company shut down Boss Fight Entertainment, one of the gaming studios it acquired in 2022.
Games on Netflix have had mixed results. At the end of 2024, Epic Games executive Alain Tascan joined Netflix as president of the division and under his leadership, it has focused on key areas including kids, party games like “Netflix Minigolf,” narrative games and mainstream games like “FIFA World Cup: Launch Edition.” The company also removed games in part because they did not have high engagement from its library.
Last year, Netflix unveiled several party games including “Boggle Party” and “Pictionary: Game Night.”
In June, Netflix released a narrative game made by Night School called “Unhinged” about a woman who is trapped inside her apartment during a hurricane and is trying to find safety. Voice actors in the game include Zoë Kravitz and Sadie Sink.
In a July earnings presentation, Co-CEO Greg Peters reminded analysts of the market opportunity for games, with $150 billion in consumer spending not including ad revenue or markets in China and Russia. He said the streamer is seeing solid numbers from its cloud games such as FIFA and “Unhinged” and higher adoption and retention in the cloud games than mobile games. He also said there has been strong engagement and growth from kid games.
“We’re just getting started here,” Peters said. “We’re scratching the surface in terms of what we think the total potential of the space offers for us.”
The layoffs come as Netflix stock has declined 37% from a year ago. Investors are concerned about how much time people are spending on Netflix compared to rivals like YouTube. YouTube represents about 14% of streaming-watch time by U.S. viewers on TVs, compared to Netflix’s 8% in May, according to Nielsen.
In addition to games, Netflix has added other types of content to its streaming service over the years including live events like NFL football games and video podcasts.