The video game industry is having a record-bad year, with more than 10,000 layoffs in the first half of 2024 alone. Now, Netflix is adding to those job cuts: After just two years of operation, it has closed its AAA game development studio in Southern California.
Internally referred to as “Team Blue,” the studio opened in 2022, and was supposed to be the center of Netflix’s bigger gaming ambitions. The streamer first got into gaming in 2021, and was at first largely focused on acquiring outside studios and producing lower-lift mobile games (some recent additions to its library include a Minesweeper redux, cozy Lord of the Rings simulator Tales of the Shire, social survival game Don’t Starve Together, romance game Thirsty Suitors, and Sports Sports, launched just in time for the Olympics. All of those were licensed in with the exception of Sports Sports, which is a Netflix project). It acquired indie developers Night School, Boss Fight, Next Games, and Spry Fox, and then opened Team Blue and another studio in Helsinki.
Game File, which was first to report the closure, says Team Blue was aiming to make big-budget, multi-device, AAA games. To do that, it tapped several big hires with lots of industry experience: Overwatch producer Chacko Sonny, former Halo creative lead Joseph Staten, and God of War art director Rafael Grassetti.
Subscribe for daily Tubefilter Top Stories
Sonny, Staten, and Grassetti have all been let go as part of Team Blue’s closure, a source familiar with the matter confirmed to Variety. It’s unclear how many other people may have lost their jobs.
Netflix declined to comment on the closure, but as Deadline points out, during last week’s third-quarter earnings call, whenever the topic of the streamer making AAA video game titles came up (which happened multiple times), execs demurred, and called out already-produced titles tied to Netflix’s TV shows, or returned the conversation to mobile games (Netflix has produced over 100 so far).
“We’re excited about games based on Netflix IPs,” co-CEO Greg Peters said. “We’ve got a Squid Game coming. We’ve got a Virgin River Christmas. We’ve got The Ultimatum. We’ve got games based on storied game classics like Monument Valley 3.” Peters referred to video game development as a means to “strengthen our entertainment offering” and help with subscriber growth and retention.
Fellow co-CEO Ted Sarandos made it clear Netflix isn’t giving up on games entirely: “Our aim here is to always have a very steady drumbeat of great new TV shows and films, and games for our members to watch throughout the year,” he said.
That commitment is further illustrated by another recent hire: Ubisoft co-founder and former Epic Games alum Alain Tascan joined in July as the new president of Netflix’s gaming division, taking over from Mike Verdu, who became VP of Games.
But it’s clear from Team Blue’s closure that Netflix is pulling back on game development—or, at least, it’s pulling back on developing the kinds of games that could compete with the titles its Team Blue leaders made. There likely won’t be a Netflix equivalent of Overwatch, or Halo, or God of War, or any other iconic games players are willing to pour thousands of hours into playing. Its focus appears to instead be on the kinds of mobile games its subscribers can mindlessly play on their phones…maybe while watching Netflix content on their TVs.
