The company only recently made splashy hires from Halo and Overwatch.
Netflix’s foray into gaming is well-known, particularly for its indie and mobile offerings. With a catalog of unique titles such as Into the Breach and Terra Nil, Netflix has carved a niche for itself within the mobile gaming space. However, the company recently tried to shift gears, eyeing the more competitive and resource-heavy AAA gaming market—a venture that now seems to be ending. Netflix has officially closed its Southern California-based AAA studio, known as Team Blue, according to a report from Game File.
The Rise and Fall of Netflix’s AAA Ambitions
In 2022, Netflix made a bold move by hiring top-tier executives from some of the biggest names in the gaming industry to spearhead this ambitious project. The most notable hire was Overwatch boss Chacko Sonny, who was appointed to lead Team Blue. Soon after, Halo veteran Joseph Staten came aboard as Creative Director, followed by God of War art director Rafael Grassetti. With this star-studded lineup, Netflix seemed poised to make a significant impact in the AAA gaming space, a stark departure from its usual mobile and indie game offerings.
Staten even revealed that Team Blue was working on a groundbreaking new AAA game—a multi-platform title based on an all-new IP. This announcement had the gaming world buzzing with excitement about Netflix’s potential to deliver a big-budget game that could rival industry giants like Microsoft, Sony, and Activision Blizzard.
Unfortunately, less than two years after assembling this dream team, Netflix has pulled the plug on its AAA venture. Both Staten and Grassetti have since parted ways with the company, and Netflix confirmed that Team Blue is no more.
A Risky Leap
Netflix’s attempt to break into the AAA gaming market raised eyebrows from the start. While the company had made a name for itself in mobile gaming, developing a multi-platform AAA title is a far more ambitious—and risky—endeavor. As Engadget journalist Igor Bonifacic pointed out when Netflix first announced its AAA studio, “funding the development of a multiplatform AAA game is significantly more ambitious and, it should be noted, risky.”
Unlike Netflix’s mobile games, which are designed to fit neatly within the company’s existing app and streaming model, a big-budget, multi-platform AAA game presents a different challenge. These games require enormous investments in both time and money, as well as a dedicated audience willing to support it long-term. The risk, especially for a newcomer like Netflix, is that such an endeavor might not yield the desired return on investment.
What Went Wrong?
While Netflix has remained tight-lipped about the specific reasons for shutting down Team Blue, several factors could have contributed to the studio’s untimely demise. Developing a AAA game from scratch is an incredibly complex and resource-intensive process, and any misstep—whether in project management, creative direction, or technology—can lead to significant setbacks.
Another possible explanation is that Netflix’s overall gaming strategy might have clashed with the unique demands of AAA game development. Netflix’s current strength lies in casual, mobile-friendly games that integrate well with its core streaming platform. These games can be played on-demand, within the Netflix app, making them a seamless part of the subscriber experience. A AAA game, by contrast, requires a standalone presence and extensive post-launch support, which may not have aligned with Netflix’s existing model or long-term strategy.
Additionally, the broader economic climate has become more uncertain in recent years, and with rising costs across the tech and entertainment industries, companies like Netflix may be reevaluating their investment strategies. Netflix’s decision to close Team Blue could also be part of a larger effort to refocus resources on more sustainable ventures.
A Future in Gaming—Just Not AAA?
Despite the closure of Team Blue, Netflix’s commitment to gaming remains strong—just perhaps not in the AAA space. Since its entry into the gaming world in 2017 with a Stranger Things mobile game, the company has steadily expanded its gaming portfolio. As of 2023, Netflix had nearly 90 games in development, including partnerships with respected indie developers and in-house studios.
These games are a natural fit for Netflix’s content-first approach. Subscribers can easily access and play them on their devices as part of their existing membership, blurring the lines between streaming and gaming. This model not only keeps subscribers engaged with the platform but also allows Netflix to experiment with gaming without the high risks that come with AAA development.
As for Netflix’s broader gaming ambitions, while the company may have closed the door on AAA for now, the lessons learned from Team Blue could still influence its future direction. Netflix has always been a company that’s willing to take risks, and it’s possible that we could see the company return to the AAA space at some point—hopefully, with a clearer path forward.
Conclusion
The closure of Netflix’s Team Blue studio marks the end of what could have been a groundbreaking venture into the AAA gaming world. Despite the studio’s high-profile leadership and bold ambitions, the project ultimately proved too risky for Netflix to sustain. Nevertheless, Netflix continues to grow its gaming portfolio through indie and mobile games that better align with its streaming-first strategy.
As the gaming world watches Netflix’s next move, it’s clear that while the company may have hit a roadblock with AAA games, its broader commitment to gaming remains alive and well.
