Netflix Shuts Down Its AAA Game Studio | Hacker News Reader

Netflix Shuts Down Its AAA Game Studio

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Unfortunately, I'm not surprised. As many large tech companies have found out the hard way (see also Alphabet, Amazon, arguably even Meta and Microsoft), the games industry is not like the tech industry as a whole when it comes to success. Making games is difficult, and they don't lend themselves well to the same development strategies as websites or apps do.

Add this to how unpredictable success is for the most part (even established teams with dozens of years of experience have struggled to create hits on a regular basis), how deeply competitive the industry is and how hard it is to even recognise a hit if you're not already involved, and well, it's a bad fit for the average non gaming company in general.

heck even ex-giants like ubisoft are collapsing.. but that's prob a different issue

Yeah, most of the gamers don't seem to be interested in woke messaging and just want a fun game.

Asian companies that have not been under Western influence seem to do better in this regard.

Well, they never actually released a game, so we can't really blame the product market fit for the shuttering. Seems more likely that this just follows netflix's strategy of aggressively canceling productions.

Asking as an ignorant outsider, are the economics of much different from that other the movie and TV industry? At least that's where Netflix is a lot more experienced than Google, Meta and Microsoft. (Whether they're good at it is another question.)

_Somewhat_, but with film and TV you have the further releases on streaming, different countries, and keep receiving royalties for all of that, potentially years in the future. All of this without ongoing work on the project itself.

Meanwhile if a game flops for whatever reason, you have to continue investing in it, adding new features, stories, fixing bugs, etc. for it to have the chance of making any new money.

Indeed, they pushed hard for a few years trying to figure out recurring revenue with Live-Service models. A few early entrants did well, like Fortnite, Destiny, Division... Although they also struggled for years before hitting their stride, and most later attempts have crashed hard as soon as they landed (Suicide Squad, Concord...).

Additionally many games are tied to a specific platform, it is not like music and films that keep being ported from medium to medium, without having to touch the original content.

Sure we can discuss about emulators, which are a gray field, and in any case, contrary to film and TV, studios earn nothing with emulators, versus reselling the VHS content in DVD.

The consumers are far more quality-sensitive for games than they are for movies or streaming shows. With a few big-name exceptions, a crappy game won't sell. The exceptions exist because the first few games with the same name were great, but the studio process got their hands on it and pushed to churn out the next one.

Money grabs with DLC everything and loot-box-of-the-week have become bad enough that some governments have begun to regulate them. Very few games can legitimately sustain a subscription model, which companies like NetFlix are accustomed to.

I wholeheartedly agree, just to add that currently even the most competent industry leaders have been seriously struggling in the last few years.

- Bethesda's Starfield and RedFall flops.

- The tumultuous Cyberpunk 2077 story from the darling CD Projekt Red.

- Many masters of their craft have lost their luster after serious flops or stagnation: BioWare, Dice, Arkane, Crytek, Blizzard, Rocksteady...

- The long-term slow death of Ubisoft and its recent big-budget failures with Star Wars Outlaws and Avatar, underwhelming Far Cry 6, also AC Shadows is looking grim.

- EA has all but disappeared from the big picture, it was hated before, but now it's just ignored. They failed to properly take advantage of their Star Wars monopoly.

- Microsoft is volatile, with aggressive acquisitions and aggressive studio closures, seriously struggling to make Xbox competitive, and a Game Pass that will have difficulties in transitioning from a loss-leader to a real business.

- Sony's Concord crash, and generally confused strategy of exclusives vs PC ports/remasters.

- The whole failure of Embracer Group trying to gobble up most of AA.

Only Rockstar seems unscathed, but mainly because they haven't released anything major since Red Dead Redemption 2 (2018) and GTA 5 remains insanely profitable. It would be the first time, but I wouldn't be surprised if GTA 6 was a disaster looking at what has happened to other highly reputable studios like Bethesda, Arkane, Bioware or CDPR.

AAA games are just getting too expensive to make now. They can still be highly profitable when they hit the right notes, but it's so much riskier now, you can end up loosing hundreds of millions unexpectedly. Because of the risk, everyone is forced to make more and more anaemic games, which make the situation worse. There seems to be an industry-wide difficulty in leveraging properly creative and talented writers and game designers, even if they don't cost much.

It would be nice if it was just AAA, but it's not. There have been some recent success stories on AA with Baldur's Gate 3, Helldivers 2, Space Marine 2... But just as many failures too (you don't hear as much about them). Also, there's been a wave of acquisitions and investments from aggressive VC-like money, and even moderate successes are studio-closing failures for them (Hi-Fi Rush, an example of many).

And as usual, there are always a few fantastic success stories for Indie games, but big-picture the market is more saturated than ever and the vast majority of indie developers end up making less than minimum wage.

Tough times.

>Sony's Concord crash, and generally confused strategy of exclusives vs PC ports/remasters.

Sony has two subsidaries making games:

* Sony Music Entertainment Japan (SMEJ) through their subsidary Aniplex. They are not to be confused with Sony Music Entertainment (SME), another subsidary.

* Sony Interactive Entertainment (SIE), who are the PlayStation people and historically Sony's video game division. They were previously Sony Computer Entertainment before they moved to California and rebranded.

* SMEJ and SIE are equals under the Sony Group Corporation conglomerate.

SMEJ more or less minds their own business, their operations concern all entertainment media in Japan including games. Their subsidary Aniplex is their anime, video game, pop music, and overall otaku division.

Aniplex's games have been generally well received, with Fate/Grand Order (developed by DelightWorks and subsequently bought out by Aniplex, this is important for later context below) being the foremost example and others such as all the Sword Art Online games.

SIE loathes SMEJ and Aniplex because their games by comparison have crashed and burned again and again, Concord being just the most recent example of many. They even spun up a game dev studio called ForwardWorks to defeat Aniplex's DelightWorks, but ForwardWorks like most of their other ventures failed while DelightWorks just kept moving along.

SIE is also in the awkward position of approving PlayStation ports of Aniplex's games, despite their hatred.

So if you ever wonder why some of Sony's games are crashing and burning, just remember: It's probably by Sony Interactive Entertainment, and they are too busy trying to drag their fellow co-workers down to be making good games.

Yes, relatively speaking Sony is not doing too badly. They might have been doing better a few years ago, but it hasn't changed that much.

PS5 was a real success story despite supply-side struggles the first few years. They still have a highly respected portfolio of exclusives, and now that Xbox is not really competing, they can afford to loosen their grip a bit and cashing-in by also slowly releasing them on PC, generally encouraging players to pay for a game multiple times through remasters and cross-platform ports.

They might not be doing as well with first-party games, but that's fine. Astrobot has been a pleasant surprise and unexpectedly successful.

I mean, I think there is a signifigant portion of video game players that could have told you Starfield and RedFall would underwhelm.. Bethesda players clearly want, nay are begging for more Elder Scrolls and Fallout main line games.

I know Bethesda wanted a new IP, but literally their audience was begging them to make the stuff they want to play faster and it seems like they ignored it, at their peril.

Agree on everything else, just salty at Bethesda for dropping the ball. I'd also add Valve to the list somewhere as another weird example because they make far too much money distributing games to have as strong an appetite for making them despite a pretty good track record (The hardware... maybe another story)

I agree, again, there's a surprising endemic difficulty throughout the whole industry to empower decent writers and designers to make properly engaging and interesting games, and that's not really a budget issue. There's a comparison to be made with Amazon Prime's big-budget flops like Rings of Power, but others like HBO or Apple TV are still managing to reward and empower good writers.

It must be an underlying systemic issue, they are not stupid. They keep betting big on things that are obviously doomed from the outset to any average gamer, but they are blind to it. They think these bets are safe because they appeal to a wider audience, but they end up making them even riskier because they don't appeal to anyone.

On Valve, they have been doing their own thing for like 15 years. They flirted with being a normal games studio in the Half-Life and Portal era, but that didn't last long. It's not just Steam, most of their games like Dota, Counter-Strike and Team Fortress are still always at the top of the charts in active players, they require such minimal maintenance, and they are wildly profitable due to user generated content and item trading economy. Steam Deck has been surprisingly successful too, and they've taken a decent piece of the pie in VR.

AAA games need to do honest pricing. They can release at $70 dollars but if it’s not a hit, drop the price and release modding tools so the community can have a go at reinventing it.

What they seem to do is drop the price and give it another go with updates, but the game has already failed by their standards (it no longer sells at $70). The second life of games always comes from the community.

They underestimate how much gamers want to be involved in the game design process, even by a mere purchasing vote.

Speaking for PC games here.

Indeed, Skyrim was really not that good, the modding community made it a >decade-long success. Bethesda has acknowledged that to some extent and built some infrastructure to facilitate it, but they also tried to get a cut from it, so the result is quite mixed. Few other studies are open to it.

I agree that mods can greatly improve the Skyrim experience but I sunk 1K+ hours into the game (over a decade-ish) all on my Xbox (unmodded). I was super happy when they released support for mods but the game was/is awesome standalone IMHO.

Skyrim was great for 2012, and while it was fairly bland it was still large, colorful, and had great music. it's pretty shallow, but modding breathed new life into it.

They're trying to make art by committee, which can only happen by accident if at all. In the case of some (Concord, reportedly, but probably some of the others too), those committees are probably cripples by toxic positivity, such that negative feedback doesn't exist and the committee is left thinking its farts don't stink. You cannot make art if you can't identify and correct deficiencies. I think anybody who has really developed their own artistic talent probably understands this, if you want to make something good you have to be critical of it and be willing to change your approach to make things better. This process is crippled in committees where criticism is stifled.

I agree, but there's somewhat of a selection bias here. Pretty much all big games, successful or not, are designed by committee. Auteurs have always been rare in gaming and the few that exist are mostly a marketing front and don't have as much influence as they seem.

I think you are right, but this cannot be the whole story, widely successful games have followed this methodology too.

I think most big games are commercially successful mainly through shear force of marketting. If you strip out that, most of the rest worth playing have one or two visionaries at the top on a position to be critical of their own ideas and dictate to everybody under them.

Or at least have some people smacking them down when they ideas are bad or not good enough. It will work when people doing smacking are not at the same time political officers.

A committee can't maintain a vision, I'd actually argue it's overstated that a visionary at the helm of a project isn't needed when really it's the thing that makes or breaks it.

There's a reason Dark Souls 2 is the bad one.

>There seems to be an industry-wide difficulty in leveraging properly creative and talented writers and game designers, even if they don't cost much.

That is a symptom of the investment guarding gremiums not signing off on any risky endeavours which is another symptom- the people in charge of the investment destroying the investment with funny political games.

On the other hand, the type of games just below AAA is as alive as never before. I'm having a very good time with Steam right now filling my simulation and strategy games itch, genres that were pretty much dead in the AAA heydays. And small indie teams don't need million sellers to stay afloat either. I think the looming "death" (or rather contraction) of AAA will be good for gaming overall because it makes room for new things.

I'm not sure I agree... There's certainly somewhat of a AA resurgence, but that's mainly because AA all but died a decade ago squeezed between AAA and indie, and it's slowly coming back to fill-in the gaps.

But AA used to be much more significant before and that's how all the current AAA companies got to where they are now. We've been missing that renewal process for a while, the big players have not felt the pressure from underneath and have stagnated.

And Indie has been a very tough situation since Steam opened its floodgates after stopping Greenlight. Sure indies don't need millions, but the vast majority don't even get thousands. You are seeing an extreme survival bias, if you talk to professionals in the industry you'll hear how hard it is to even stay afloat.

Add to it the number of hours each of those ask for, and now the service games, that means one can kill their daily dosis of gaming with a single one, that gets improved over time, with new server side content, or DLCs.

And the horrible prices that they nowadays ask for as well.

Even though I still game, nowadays anything that requires several GB to download, or more than a couple of hours, isn't worthy of my attention.

Sure that will leave out all cool AAA, no FOMO here, a couple of random sessions of people playing them on YouTube or whatever are more than enough to get an idea of their gameplay and that is about it.

Even in my teenage years of Spectrum/Amiga/PC gaming I wasn't burning the amount of hours in gaming that many of those AAA ask for.

AAA games now are lukewarm slop, designed to appeal to the nonexistent "modern audience". if there's a strong IP or studio reputation to sacrifice, they can be profitable despite significant or overwhelming negative sentiment, and if there isn't, you get Concord.

all of those big studios are staffed by writers who hate their audience and designers who believe their audience to be too stupid for a system deeper than "damage" and "hp", and they all rightfully deserve to die.

> designers who believe their audience to be too stupid

How will they know to go up the ladder or break the crate if it doesn't have yellow paint on it...

They get play testers who aren't gamers and need their hand held like that. Studios and publishers think making the game accessible to people who don't play games will expand their market, but those people don't already know standard gaming conventions because they were never interested in games in the first place.

You laugh, but my experience has been in a lot of games there will be ladders and/or crates you can't interact with alongside those you can. If they're going to do that, I'd rather have the markings than waste a bunch of time trying to use non-interactive things like a moron because there's no way to tell until you try it.

Most games are littered with a plethora of unexplainable obstacles like invisible walls, ledges that cannot be climbed, boxes that cannot be opened or broken, ladders and stairs you cannot climb, and doors you cannot go through.

I think the discussion point here is that game devs and artists create a visual language for communicating to the player on elements of the game and their importance, and from simplifying some elements to be the equivalent of a pointing flashing sign that it's a reflection of their opinion on the ability of the players to understand their mechanics vs their visual language/mechanic being flawed to begin with

if you were directed in the game to go towards paths that would have inaccessible content, then I don't think painting the ground yellow says anything other than "hey idiot, stop looking around, its over here!", which, to be fair, IS strictly better from a user experience perspective than to simply get stuck due to lacking indication or direction

The trick (albeit difficult) is to be very subtle about it, maybe a quick emote from the main character "I shouldn't be here" or some environmental design that guides the player.

Valve is doing an amazing job there usually, Super Giant Games as well). Other game devs slap you over the head with it, with markers, popups, and whatnot and don't even let the player do any discovery, an endless tutorial.

> Because of the risk, everyone is forced to make more and more anaemic games

and this is exactly why they flop, you're already taking on the exact same burden making something milquetoast vs making something risky, weirdly by watering it down and not rocking the boat and hoping just a scattershot mass of apathetic players will make it worth the investment is exactly why it's failing.

By aiming for the apathetic you're missing any chance at all of fanaticism around what you're making, it's a false economy believing that by watering a thing down you're increasing the chance of success.

Probably the next most anticipated game other than GTA6 is the next Souls game, and if you had pitched the original Demon Souls or Dark Souls in an Ubisoft, Bethesda, California era Sony, Microsoft, EA boardroom they'd have asked you "Who's going to even play something so difficult" yet here we are where Elden Ring made almost $1 billion with 400 employees, put in perspective to UbiSoft one of the most egregiously formulaic companies they managed 2.4 billion in 2023 with 20,000 employees and needing many more games to get to that.

I agree, but I'm more interested in understanding why everyone is making these mistakes over and over again.

It's naive to think that they are all stupid, it's just not possible. It's not just old soulless corporations, many beloved and sharp studios are falling into the same traps. Even the most savvy and successful newcomers from the Indie scene trying to go bigger fall for this now.

The leading examples are the 4-5 Forspoken-likes we've seen this year that no one was asking for and everyone has forgotten instantly. With derivative open-world action, unbelievably boring story and characters, and that neon-purple magic+tech aesthetic that all studios seem to think is so fresh but somehow they all come up with the exact same thing.

I get that you want to play it safe and copy a proven model, fine, but is it so hard to at least sprinkle it with some decent writing please? Everyone is so hungry for good IP to exploit, but IP is all about characters, world-building and story, and they are skimping on those for no good reason.

I'm sure they hire good writers, but for some reason they are not getting through. The current political mood might be a factor, but there's still a lot of room to play in the politically-neutral space, games have always lived there.

It's not just the big companies making these, it's also every talented studio that got some extra funding to scale-up. I guess it's all about the tech VC attitude seeping in at all levels? Uber didn't need writers... But you'd think money people would at least be good at actually making lots of money. I get all the aggressive monetization and creatively bankrupt cash-grabs, fine, but now they are creatively bankrupt and don't even make any money! Perhaps with some patience the industry will learn the right lessons from this and we are headed towards a new golden age.

It's definitely not as simple as they're stupid because they are doing this as a response to what they think are market conditions.

Maybe it's more just cowardly, no one on the team in a position of power is saying no, no one stepping up and leading the vision, maybe a fear of being too critical of work in meetings because gaming is a bit of a HR minefield.

I've worked in creative fields and meetings can get heated, can definitely see people not saying as much if they would be worried of being painted a bully or something.

> The leading examples are the 4-5 Forspoken-likes we've seen this year that no one was asking for and everyone has forgotten instantly

This is a case of turning around an oil tanker, around the time they all went into development it all seemed like the next big thing but you're too far into it to change the game significantly so one flops then another then another.

Making games is very different from making software, but what about movies/tv shows? Netflix overall seems to have a good idea of how to do that?

I suspect it's a lot more expensive to find out if you have a good idea with games vs tv/movies.

There are definite similarities. There is the mercurial creative team making the art, and the technical team that gets that art onto a screen. But TV/film relies on the "star system", a network of families and agents that generate the recognizable actors that in turn drive sales. Gaming doesn't have such a system. Sure, there are recognizable people in gaming, but while the average movie watcher can recognize maybe a hundred actors, the average gamer cannot name more than one developer. Netflix is integrated into the star system and so can consistently generated profitable content. They never found an equivalent hook into gaming, because there isn't one. Game development likely cannot be made consistently profitable.

https://en.wikipedia.org/wiki/Star_system_(filmmaking)

UbiSofts attempt to scientifically generate consistent games following the formula also come to mind. The whole standardize the production attempts are super-toxic in gamedesign, as the alure is there (use the same engine everywhere) etc. and the result is always bland shovelware.

> Making games is very different from making software, but what about movies/tv shows?

Ridiculously different. Movie people really rely on the fact they control the camera, and when a movie is done it replays the same every time. That allows a lot of corner cutting which you cannot do in games.

Isn't the film industry struggling too? Perhaps not as much financially but still.

Holywood is dominated by Marvel and a handful of recognizable directors like Christopher Nolan, Denis Villeneuve, Martin Scorsese, Ridley Scott and Quentin Tarantino, and they are struggling to fund and distribute their projects too. Actual cinema theatres are dying a not-so-slow death, accelerated by the pandemic, and streaming seems to be very ineffective for movies unlike TV.

TV is doing okay, but it has obviously declined from the golden-age of Breaking Bad, early Game of Thrones, early House of Cards, Stranger Things... Just off the top of my head. There is still some good stuff coming out but the overall density in quality has dramatically gone down. Netflix and Amazon Prime are not doing great financially, HBO just about managed with the weird Discovery merger, Apple TV remains small (seemingly intentionally).

And the music industry? All but gone really in terms of a real money-maker. There's Talor Swift and all the Spotify beggars.

Is there any creative industry that is actually in a healthy growth stage? Podcasts? There's just too much supply and not enough demand at this point, people have only so much free time.

I wouldn't say that the games industry has unpredictable success. Games that are fun with a great story make money. Many games studios' don't make fun games. or don't try to evaluate why a success became a flop. I'll give an example. Ghost Recon wildlands was fun, had a great story and was a delight. It's squeal Break-point sucked because it was a different style of gameplay with nothing but micro-transations. It was a signal from the developers to the users that they didn't really care, they just wanted to extract money.

If you focus on fun and story you'll succeed. Many games studios try to paper over the lack of these things with shiny graphics and cool features. But people play games to have fun.

> As many large tech companies have found out the hard way (see also Alphabet, Amazon, arguably even Meta and Microsoft), the games industry is not like the tech industry as a whole when it comes to success.

I think two points are missing here, firstly these companies have hired a lot of proven talent from the games industry, and secondly it is arguable these companies have not been succeeding at executing in any domains for years.

The culture of the tech industry has been completely destroyed, largely by the adtech money hose. Compound that with the difficulties of the games market today and it is not surprising there are problems.

the industry is long overdue for a well deserved crash!

Netflix company ideology isn't cut out for gaming, games take huge amounts of money and if you're starting a new IP from scratch you're burning that for many years with absolutely nothing to show for it or sign it will pay off.

With Netflix rapidly ending shows, even ones that were critically and consumer acclaimed like that Dark Crystal reboot because they didn't hit whatever metric they internally consider a success it was just naive that this would ever play out in a company unable to make 8 to 10 year IP plays confidently.

I wonder what went wrong. But at the same time this feels inevitable.

The best AAA studios on earth still strongly depend on purpose built hardware to deliver their experiences. The broad spectrum of smart media devices is a hellscape compared to Xbox, PS, Nintendo and PC. There is no way you are going to ship something like GTA6 to a Vizio tv without doing rendering on cloud GPUs. Netflix would also have to compete with platforms like Steam, which are already expanding into broader ecosystems.

Yeah, I think controlling the h/w platform is necessary (but not sufficient) for success here.

Probably also needed is patience, which (for example) was missing with Stadia (Alphabet) and with Luna (Amazon).

> patience

This is the key with game development. Getting a concept to work is a non-linear path at best.

Most business leaders do not understand this process and will ruin it the instant they attempt to observe and quantify it. I've seen it almost ruin boring-ass B2B SaaS. Fun isn't even an objective here and that's the hard part. Most can't cope with the chaos of this artform when it's done without restraint. I think you have to be moderately insane to run a AAA studio effectively.

I don't think patience would have made a difference, it's simply that the economics of cloud gaming are untenable.

The type of people who reliably spend money on AAA games don't want the degraded experience that cloud networking introduces. These days they also understand that they can potentially lose access to their cloud catalog if they are banned, the internet goes down, or if the publisher decides to withdraw titles.

By comparison, buying a PS5 or a Nintendo every 5 years amortizes nicely when the gameplay experience is objectively superior and you have a sense of security that you own the game. Even worse for the business model is the ongoing costs of running burstable GPU clusters at scale - clusters that use a lot more power and are driven by components that are a lot more expensive while also being more prone to failure.

The situation is even worse today with transformers putting extreme strains on commercial GPU supply for the foreseeable future. All this before content licensing and production costs which is its own formidable challenge as netflix already knows. Cloud gaming has no hope of success.

AAA game development without having an established IP/franchise is a real crapshoot, the first game must be great to draw enough players to a new thing, or you have poured $500M down the drain with nothing to show for it. Hell, even if it's great, it can still fail in the market. And the game has to be original, because if it's just derivative, people will just keep playing the established franchises (see Sony's Concord). But it can't be too odd, because the mainstream is all about established genres.

I wonder if it wouldn't have been better to make a dozen games costing $10-20M and build on the successful ones. Base some of them on Netflix series and movies for a little extra marketing.

Pretty sure netflix does exactly that with their other studios. I guess the big names mentioned in the article (Joseph Staten, Rafael Grassetti) wouldn't go to netflix for a 10 mio. games project, if what they already achieved is 20 times bigger. Heck, the compensation of these two probably consumes a 20 mio. budget.

I think Netflix for a few years now has been optimizing for "the cost of production of each consumed hour". They have been doubling down on acquiring/producing international content, reality tv and live specials—which are all cheaper, and less risky given the formula repetition. And when they have an expensive show that is not viral and super-successful, even if it was good by many standards, they cancel it. Many have noticed the reduction in quality and the increase in rate of cancellations, but it doesn't seem to be hurting their subscriptions much, at least not yet.

Netflix is getting into Live TV now, they are streaming Sunday Night Football iirc

That makes sense, Amazon has been doing it successfully for a few years now.

Yeah Amazon has Thursday Night Football. I hope these two (netflix and amazon) offer a full live tv service to compete with youtube live.

good! They already make enough horrible TV series adaptions no need to also infest gaming.

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