Netflix acquires Warner Bros.: What will happen to the gaming division?

Rumours that Warner Bros.'s gaming division was about to be acquired had been circulating for years. For a long time, it looked as though both Microsoft and Sony might be interested, and in the process acquire the Mortal Kombat series and DC rights, among other things. However, interest in major acquisitions seemed to wane after the Activision Blizzard deal, and after the cracks began to show between Discovery and Warner Bros., there was instead increasing talk and rumours of a takeover of Warner Bros. as a whole.

Several companies were reported to be interested, not least Amazon, Paramount, and Sony. When Netflix relatively recently threw its hat into the ring, most of us had a pretty good idea how it would end. And sure enough, a few hours ago, it was confirmed that Netflix and Warner Bros. had agreed on a takeover worth over $80 billion. As with Microsoft's purchase of Activision Blizzard, such a deal must be approved by countless authorities around the world, but there is every chance that it goes through.

So... this naturally raises a number of questions. What will happen to HBO Max (and what about all those who took advantage of the introductory price and got a 50% discount on the service for life?), what will happen to the newly launched DC Universe, will Warner Bros. films no longer be shown in cinemas (and will they even make films or will there be a greater focus on series now), what will happen to the Netflix fee, will Warner Bros.'s extremely costly ventures take on the budget feel that Netflix often has, and does this mean shorter series from now on, since Netflix likes to pull the plug early (does Netflix really have the patience for at least seven seasons of Harry Potter)?

Many questions, but no answers. And what I am personally most interested in is what this means for Warner Bros.'s gaming division. Sure, one could argue that it's not what it used to be after several failed ventures, which feel more connected to the live-service craze than to bad studios. NetherRealm still makes excellent fighting games, few make superhero games better than Rocksteady, and we're hardly alone in dreaming that Monolith Productions will bring Condemned and F.E.A.R. back to life and release a sequel to Middle-earth: Shadow of War. Plus, they own Lego game masters TT Games.

Netflix has been developing its own games for some time, but so far they have focused on smaller casual titles, and the few larger studios and projects they have had have been shut down. However, Netflix generally does not release games for consoles. It's extremely unclear how Warner Bros.'s gigantic gaming division will fit into the subscription service. Turning their games into streamed mobile games would be a cultural decline of a kind rarely seen, so Netflix must reasonably continue to support physical formats... if they even want to stay in game development.

This would be quite a significant shift for Netflix, which would then be forced to decide which games to launch on its own service and which to release to its direct competitors. And if they release, for example, the next Mortal Kombat (assuming that's what NetherRealm is working on, although Injustice 3 is perhaps more likely?) and Rocksteady-Batman to all formats including Netflix, that means a significant number of gamers will get the games for free on day one.

This is nothing new in itself, as Microsoft also does this with Game Pass Ultimate, but as we know, it costs nearly £30 per month. If Netflix wants to offer the same thing, plus its own films and series as well as Warner Bros.'s, I don't think the monthly fee will be enough.

Warner Bros.'s gaming division was reasonably successful until they started chasing the elusive live-service success, which is a bit like chasing the pot of gold at the end of the rainbow. Live-service titles such as Harry Potter: Quidditch Champions, MultiVersus, Suicide Squad: Kill the Justice League, and Gotham Knights have all failed commercially and eroded the coffers built up by more classic successes such as Lego Star Wars: The Skywalker Saga and Hogwarts Legacy.

Many have hoped that Warner Bros. would realise this and reprioritise, but there is no concrete evidence to suggest this, and if I had to guess, it seems more likely that Netflix wants to push for lower budgets and more live-service, rather than giving the green light to extremely expensive single-player titles that take at least half a decade to complete and which they then mainly have to launch on competing formats and services. For example, I wouldn't be surprised if they chose to release a free version of the next NetherRealm fighting game where all but two characters are sold individually (the same premise as the Killer Instinct reboot). And how willing are they to include an expensive campaign when no other fighting games have this?

Netflix is obviously not in the charity business, and I strongly doubt that they will tolerate a rather mismanaged gaming division (because that's what it is, without a doubt) that costs money. Netflix needs to adopt a new third-party strategy and get sales going, but my assessment is that this will require good games. All too often, this detail is forgotten while sophisticated systems are built to charge extra for pink weapons, skins depicting the superhero who just hit the cinemas, and the like... and unfortunately, patience and prioritising high quality are not things I immediately associate with Netflix's way of working.

One alternative is to significantly reduce the gaming investments and completely revamp the approach to Warner Bros.'s titles to something more in line with Netflix's gaming investments today. However, I doubt that this is something they would want to do without further consideration. The DCU in particular would benefit from being backed up by a couple of really good games, and Netflix is probably well aware of this. One possible route would therefore be for them to treat DC in the same way that Disney treats Star Wars, namely by allowing more developers to make games. This would mean that Netflix would not have to take on any risks other than being the licence owner.

In theory, this would make it possible to have a Wonder Woman game from Tomb Raider studio Crystal Dynamics, a Green Lantern adventure from Quantic Dreams, a Peacemaker shooter from PlatinumGames, and a DC card game from Sumo Digital. Since Netflix will certainly want to invest in DC, particularly with more TV series (which is somewhat of a Netflix forte), this seems like a plausible strategy. Similarly, they are likely to be very keen on synergies with Harry Potter and the ever-popular The Lord of the Rings universe.

Then we mustn't forget that this works both ways. Of course, with a greater capacity for lavish games, Netflix will also want to exploit its own brands. It's probably a given that, in time, there will be AAA titles based on brands such as Stranger Things, Squid Game, Wednesday, KPop Demon Hunters, and Black Mirror.

But... it cannot be ruled out that Netflix simply wants to spin off its gaming division and try to sell it. NetherRealm is a bargain that I imagine many would be curious about, and if it comes with access to licences, Avalanche Software and Rocksteady Studios are also likely to attract buyers.

Hopefully, we will receive more information in the near future. What is clear is that Netflix is now entering a new era for them. They value their exclusives as much as Nintendo, but the current strategies of Warner Bros.'s gaming division make such thinking impossible. Either we will see a change in attitude and strategy from Netflix, a major shake-up at Warner Bros. Games, or something in between. The only thing that seems fairly clear at the moment is that things will be different, and quite significantly so.