As Finland considers joining NATO in the wake of Russia’s aggressive invasion of Ukraine, another deal is being struck in the country. Netflix stated today that it would acquire Next Games, a mobile game developer in the country, for a total of €65 million ($72 million). Next Games is a publicly-traded company in Helsinki, and the deal is an all-cash share purchase for €2.10 per share. The gaming company’s board of directors has already accepted the deal and is suggesting it to shareholders however, it has yet to be executed and is scheduled to close in Q2 2022.
The agreement is part of Netflix’s larger aim to expand its gaming content as an addition to its video portfolio, and Next Games is an ideal fit. THE free-to-play mobile games developer has already created products based on some of Netflix’s most popular shows, like Stranger Things and The Walking Dead, indicating that the two organizations already had a strong relationship. By bringing Next Games’ IP, skills, and established company selling in-app purchases in-house, this agreement will cement that and enhance Netflix’s margins beyond simply licensing the brands.
“Next Games has a seasoned management group, a proven track record with mobile games built on entertainment franchises, and strong operational capabilities,” said Michael Verdu, Netflix’s VP of games, in a statement. “We are thrilled that Next Games has agreed to join Netflix as a primary studio in a strategic region and major talent market, extending our internal game studio capabilities.” While we are just getting started in gaming, I m sure that we will be able to establish a portfolio of world-class games that will excite our members all around the world in collaboration with Next Games.”
Next Games had 120 workers at the end of 2021, and its most recent annual statistics indicated €27.2 million in revenue in 2020. That year, in-game (in-app) purchases accounted for 95% of its sales. It will now have additional resources to reinvest in existing titles and expand its presence in Netflix’s collection.
Teemu Huuhtanen, the CEO of Next Games, is a product of Finland’s enormous gaming ecosystem, which has played a significant role in establishing new ground in gaming over the years. Before Next Games, he worked as an executive at Rovio, the Angry Birds owner (this was at a time when it was still a formidable presence on app stores). He had been at Sulake for almost a decade before then. spent nearly a decade at Sulake, a pioneer in the online virtual worlds area with the development of Habbo Hotel (now called Habbo, having weathered many a controversy in intervening years).
“We have had an unbroken focus on executing on our vision: to be the partner of choice for global entertainment organizations by crafting authentic and lengthy interactive entertainment based on the world’s most beloved properties,” Huuhtanen said in a statement. “Joining forces with Netflix, the world’s largest streaming service, gives a chance for a logical and exciting extension of our plan to create interactive experiences for the entire world to enjoy.” Our close work with Netflix on Stranger Things: Puzzle Tales has already demonstrated that we make a powerful team. This is a once-in-a-lifetime opportunity to improve the studio on all fronts and continue our objective together.”
Despite its scale, Netflix has only made a few acquisitions throughout the years, as per the CrunchBase data. Next Games is its first gaming acquisition, however, the others include a visual effects firm, two interactive content creators for youngsters, an anime comics publisher, and the Roald Dahl estate, so a gaming component has likely been present in its M&A plan all along.
But, at a time when firms like Disney can continue to pull the rug out from under Netflix’s feet by stealing crucial video content to boost the choice on their streaming video networks, this is one method for Netflix to cultivate its walled garden. Purchasing Next Games underlines a strategy to create or acquire exclusive work and then build out larger franchises based on it across numerous devices and experiences.