Netflix is closing Night School Studio and Moonloot Games while eliminating additional jobs across its gaming division.
Night School joined Netflix in 2021 after developing the acclaimed Oxenfree. Moonloot was established in Helsinki the following year. Their closures leave Next Games as Netflix’s only dedicated first-party studio alongside a central team that works with outside developers.
Six weeks ago, Night School released Unhinged, a 30-minute horror game streamed directly to TVs. Netflix co-CEO Greg Peters told investors the game was producing “really solid numbers.”
The title’s performance wasn’t enough to protect the studio that built it.
Netflix is concentrating its gaming strategy around party games, children’s titles, narrative experiences and games with mainstream recognition. More of those products will come from outside developers and run through Netflix’s existing TV app, with subscribers using their phones as controllers.
Netflix’s Studio Portfolio Is Down to One
Netflix entered gaming in 2021 with mobile titles included in every subscription. The company acquired Night School, Boss Fight Entertainment and Spry Fox, created Moonloot and assembled an internal AAA studio known as Team Blue.
The studio portfolio gave Netflix dedicated development capacity as it tried to learn the gaming business. It also gave the company fixed costs, long production cycles and several teams operating outside its core expertise.
Team Blue closed in 2024 before releasing a game. Netflix shut down Boss Fight in October 2025 shortly after praising its work on Squid Game: Unleashed. Spry Fox was sold back to its founders in December.
Night School and Moonloot are now closing as well.
Next Games remains inside Netflix and has worked on several of the couch-oriented party games central to the current strategy. Netflix’s broader gaming team can commission projects, manage licensing relationships and integrate games into the service while external developers carry more of the production responsibility.
That structure looks increasingly similar to how Netflix approaches film and TV. The company controls the platform, customer relationship, merchandising and distribution while much of the actual production happens through outside partners.
Unhinged Proved the Product Could Work
Unhinged was designed around Netflix’s current gaming priorities.
The game ran through the TV app, required no console and lasted approximately 30 minutes. Subscribers could move from watching Netflix to playing a narrative horror experience on the same screen.
That format lowers several barriers that have limited Netflix Games. Customers don’t have to search an app store, download a large mobile title or learn a new gaming device. The Netflix subscription already covers access.
Peters praised the early response during Netflix’s July earnings call. The company still decided that owning Night School wasn’t required to continue producing similar experiences.
A successful title can validate the format while the studio remains an expensive way to supply it. Netflix can commission another short narrative game from an external developer and keep the experience inside its app.
The decision also shows how Netflix is evaluating games. Individual releases have to support a larger product strategy built around engagement, retention and recognizable entertainment. A title performing well doesn’t automatically justify maintaining the team as a permanent internal operation.
Netflix Wants Game Night Inside the App
Netflix’s clearest gaming proposition now sits on the biggest screen in the house.
Its TV lineup includes Boggle Party, Pictionary: Game Night, LEGO Party!, Tetris Time Warp, Overcooked! All You Can Eat and a collection of Jackbox games. Players scan a QR code and use their phones as controllers.
The games are familiar, social and easy to explain. They can serve families, parties and casual players who have little interest in buying a console or working through a traditional game catalog.
When Netflix initially rolled out its TV games to roughly one-third of subscribers, Peters said the party titles reached about 10% of eligible members and produced a significant increase in gaming engagement.
Netflix can expand access as more smart TVs and streaming devices support its cloud delivery. The existing app gives the company distribution across hundreds of millions of subscribing households without having to sell dedicated hardware.
Gaming also creates another reason to open Netflix when the household isn’t ready to watch a show or movie. A group choosing Pictionary can remain inside the same subscription, interface and recommendation system used for Stranger Things or Bridgerton.
The phone-controller model keeps the setup simple and gives Netflix a direct connection between the household account, the TV and each participating player.
Licensing Gives Netflix More Ways to Buy Proven Demand
Netflix doesn’t need to create every game it distributes.
The service has licensed established franchises including Grand Theft Auto, Red Dead Redemption, FIFA, LEGO, Tetris, Jackbox and Overcooked. Those titles arrive with existing awareness and gameplay that outside studios already know how to build.
Netflix can rent established gaming demand and leave most of the development risk with outside partners. The company pays for access, distributes the game through its subscription and measures whether the title improves engagement or retention.
Licensing also gives Netflix more flexibility than maintaining a portfolio of studios. It can add games tied to current programming, seasonal events or major entertainment releases without supporting the same development organization between projects.
Netflix-owned IP can move through the same model. An outside developer can build a Squid Game, Stranger Things or Black Mirror title while Netflix supplies the franchise, audience and distribution.
The approach still requires product expertise. Netflix has to choose the right games, make them work across different devices, manage cloud performance and help subscribers discover them. It can perform those functions with a smaller internal organization than a traditional game publisher.
Games Have to Earn Subscription Value
Netflix includes games without advertising, in-app purchases or an additional subscription fee. That leaves engagement and retention as the primary return.
The company hasn’t disclosed how many subscribers regularly play its games. Early party-game adoption was measured against the portion of members whose devices could support the experience, and the 10% reach Peters cited came from that smaller eligible base.
The TV rollout gives Netflix a stronger chance to improve those numbers. The game appears in an app subscribers already use, on a device where Netflix already has substantial reach.
Netflix is broadening engagement across games, live events, podcasts and interactive product features. Each format can add utility to the subscription and give the household more reasons to stay inside Netflix.
Games face the same discovery pressure as every other format in the app. A title has to earn home-screen placement beside films, series and live programming. It also has to generate enough repeat activity to justify licensing, cloud infrastructure and product development.
Party games have an advantage because they create a clear use case. They don’t have to compete directly with a console blockbuster. They have to make Netflix useful when several people are sitting in front of the TV looking for something to do.
The Streaming Wars Take
Netflix entered gaming by assembling studios and building a broad mobile catalog. The current strategy is concentrating around cloud delivery, familiar franchises, outside development and experiences designed for the TV.
Closing Night School six weeks after Unhinged launched shows how aggressively Netflix is separating product performance from studio ownership. The company liked the engagement and still concluded that it didn’t need the developer on its payroll.
The remaining structure gives Netflix an internal studio focused on couch-friendly games, a central team that can commission projects and a growing network of external partners. That reduces fixed production exposure while preserving gaming as part of the subscription.
Netflix’s gaming business will be judged by repeat usage, device availability, engagement with its franchises and any measurable effect on retention. The studio closures make those priorities clearer.
Netflix wants the game session. It doesn’t need to own the studio that produces it.
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