The Future of Netflix’s Gaming Service Rests With Apple’s App Store Rulesby Mark Gurman · Bloomberg
The Future of Netflix’s Gaming Service Rests With Apple’s App Store Rules
November 7, 2021, 2:00 PM EST
Netflix’s games offering is currently limited on Android—and will likely remain forever so on iOS. Also: Peloton struggles as economies reopen, Apple drops masks, and a look at the latest hires and departures in the tech world.
While Netflix Inc.’s long-anticipated video game offering is currently pretty limited, the company has been clear that it eventually wants it to be a significant way to retain customers—and attract new ones. But the streaming giant has one potential roadblock in its way: Apple Inc.
Last week, Netflix rolled out the new service on the Android platform alone. The company has indicated that an Apple version is coming, but there may be complications to Netflix achieving its vision.
Right now, the Netflix offering doesn’t operate like a classic all-in-one gaming service. While you can load up a Games tab in the main Netflix app, the games are actually installed individually via the Google Play Store and operate as stand-alone apps.
The ideal approach would instead be how Netflix currently operates for videos and TV shows, letting a user find, download and access the content all within the Netflix app. That’s how many of the other top gaming services, such as those from Microsoft Corp., Nvidia Corp. and Alphabet Inc.’s Google, function on Android.
Those services are entirely cloud-based, while Netflix currently is offering both online and offline games. I expect Netflix to eventually upgrade its gaming service by turning it into a cloud-first platform.
But while that’s fine for Android, it’s a non-starter on iOS. That’s because Apple’s App Store rules don’t allow third parties to build all-in-one gaming service apps. Those rules have prevented Xbox Cloud Gaming, Nvidia GeForce Now and Google Stadia from launching on iOS devices in any meaningful way.
To access the well over a billion iPhone and iPad users, developers have had to release their services on the web, which is a far subpar experience to native software.
Because of Apple’s ban on all-in-one services, the current individual app implementation on Android of the Netflix service gives us a preview of how the Netflix offering will function on iOS.
Netflix has been actively testing games on iOS, and—according to code discovered by developer Steve Moser and shared with Power On—Netflix will release all of its games on Apple’s App Store individually and let users launch the games via the Netflix app. They won’t all be downloadable and playable within the app itself.
This approach is a solution, but not one that will put Netflix’s gaming service in the best position to succeed. Consumers tend to prefer all-in-one services. Again, the current Android offering also has that limitation, but I’d expect that will only be the case for a limited time.
To be a true all-in-one service on iOS, Netflix will have to make its move to the cloud—and Apple will need to change its rules or grant Netflix an exemption. That leaves the ultimate success of Netflix’s service in the hands of Apple, a longtime partner but also a growing rival.
Apple starts dropping mask mandate at its U.S. retail stores (again). Apple is pushing hard to get past the Covid-19 pandemic, looking to return to business as usual. In October, the company stepped up efforts to get employees vaccinated: They now either have to get the shot or—in some cases—be tested every day.
The next step in the company’s plan to return to normal: dropping the mask requirement at many of its U.S. retail stores. On Friday, Apple eliminated the mandate at more than 100 locations, including stores in California, Florida and New York. For now, this just applies to visitors, not employees.
Look for more stores to see their own requirements ease in the coming days and for the majority of U.S. locations to eventually drop the mandate. Stores in places like Los Angeles and the Bay Area that have local mandates will still be required to mask up, of course.
So, what comes next in Apple’s get-back-to-normal efforts? Look for the company to solidify plans later this month to return staff to corporate offices. Right now, the company is aiming to require employees to come to the office three days a week beginning in January, but that could always change.
Peloton finds that it may have just been a Covid stock after all. If you saw Peloton slash its outlook for fiscal 2022, causing the stock to suffer its worst decline ever on Friday, this one line in its earnings call offers an explanation: “It is clear that we underestimated the reopening impact on our company and the overall industry.”
Those were the words of Chief Financial Officer Jill Woodworth, and she was being incredibly honest.
Just a few months ago, Peloton forecast lofty results for 2022: $5.4 billion in revenue, strong subscriber growth and decent profit margins. Fast forward to this past week: Peloton sliced its full-year guidance by up to $1 billion, saw its previous quarter’s growth slow, and said it would cut back on hiring, marketing and retail expenses.
Quarter after quarter during the pandemic, Peloton maintained that it was not just a Covid stock and that it would remain strong after lockdowns eased. But now it appears that its post-pandemic hangover is worse than feared.
One key stat puts that into context: The number of workouts per hardware subscription during the quarter dropped by about four per month to 16.6 from a year earlier. People are getting out of the house, going back to the gym and not buying as many Pelotons.
Still, the company says it has a plan, including several new products and updated software. It expects profitability in fiscal 2023. Will that happen? Only time will tell, but Peloton appears optimistic.
Top Amazon Echo executive departs. Miriam Daniel, Amazon.com Inc.’s vice president of Echo and Alexa devices, has left the company. She helped oversee development of several recent Echos, including the new Echo Show 15 with a giant display. She also was a prominent face at Amazon. She met with the press and spoke at launch events to discuss the company’s latest gadgets. There’s no word yet on where she’s heading, but it appears anyone who hires her will be getting a star.
The head of Apple’s South Korea business bolts amid App Store tussle. Brandon Yoon left the company’s top role in South Korea amid an ongoing dispute between Apple and the local government over App Store rules. The country has been pushing for Apple and Google to allow developers to offer alternative payment methods, but only Google has complied. Despite the dispute, it appears Yoon’s departure isn’t directly related and he’s taking another job at a company in the U.S.
Former Tesla Autopilot executive joins Apple’s car team. Earlier this year, longtime Tesla self-driving technology engineer CJ Moore made news when the California Department of Motor Vehicles said that he implied his boss, Elon Musk, overstated the capabilities of the company’s self-driving technology. Since then, he’s been dragged into a lawsuit about a Tesla crash in Florida in 2019 as a possible witness. Bloomberg reported last month that he had left Tesla. So where did he end up? Apple’s own car team.
Post Game Q&A
Q: What would your ideal Apple smart home strategy look like?
Q: Why does the “homeOS” operating system name keep popping up on Apple job listings?
Q: Are there any Apple-related events I should tune into this week?
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