The news that Netflix is trying to buy Warner Bros. didn’t ever look like it would be good for game players, but a recent investor call by the streamer suggests things are a whole lot worse than we previously imagined. Netflix co-CEO Gregory Peters told investors that when it came to Warner’s gaming division, it didn’t even factor it into the $83 billion dollar deal. It was apparently considered to add nothing to the company’s overall value, because “they’re relatively minor compared to the grand scheme of things.”
Warner Bros. Games hasn’t exactly shone of late, with multiple closures of extremely talented teams, and the recent flops of MultiVersus and Suicide Squad: Kill the Justice League, but it’s still hardly minor. For one, Hogwarts Legacy was the best-selling game of 2023 in the U.S., more popular that Call of Duty, selling 34 million copies in its first year. That’s billions of dollars in revenue. Then you’ve got the Arkham franchise, Mortal Kombat, plus the infinite money machine that is every single Lego game from Star Wars to Harry Potter to Batman. Yes, it’s suffered as much as every other arm of the company under David Zaslav, but it’s not something you’d immediately write off as worthless. However, that’s the price Netflix put on Warner Bros. Games when bidding for the whole company.
“While they definitely have been doing some great work in the game space,” said Gregory Peters on the December 8 call (thanks Pocket Gamer), “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.”
Netflix already failed hard with games
It’s important to put this perspective into context. Netflix has spent years trying to work out how to make money through video games, and only failed and failed again, stripping back expensive forays into the worlds of PC and console gaming and now sticking exclusively to mobile games with a casual emphasis. That makes sense: Netflix is a TV and movie streaming service, and it was with hubris that it launched its video gaming ambitions into a market that Google had just so spectacularly crashed out of. Big companies look at the sorts of numbers publishers make from a Call of Duty or Genshin Impact and think, “We’d like some of that please,” and assume it just happens. It doesn’t, millions gets wasted, and people lose jobs.
It’s in the aftermath of this that Netflix is attempting its purchase of Warner Bros., so on some level you can understand why a company so disillusioned with gaming might be so laissez faire with this aspect of the prize. However, it also speaks of some quite spectacular shortsightedness, given the lucrative nature of so many of WBG’s licenses.
This all suggests bad times are ahead for those surviving developers under Warner’s roof. Peters further comments initially suggest there might be some internal insight, as he says, “Now we’re super excited because some of those properties that they’ve built—Hogwarts is a great example of that—have done quite well, and we think that we can incorporate that into what we’re offering.” However, “what we’re offering” is the key phrase, given how clear Netflix has recently made its focus on mobile only. “They’ve got great studios and great folks working there,” adds Peters, “so we think that there’s definitely an opportunity there. But just to be clear, we haven’t built that into our deal model.”
It certainly makes sense to see the IPs Netflix is getting in the deal as opportunities when it comes to its casual gaming development. The Lego games are already mobile-friendly and have a broad family audience, while licenses like Harry Potter and Batman can be milked in an endless stream of mediocre cellphone games. But hopes for further entries in Rocksteady’s Arkham franchise seem unlikely to be met, let alone the new owners reviving what Warner Bros. once did best, with game series like Shadow of Mordor, FEAR, and other cruelly abandoned Monolith properties.