Four weeks after praising the numbers, Netflix closed the studio

Four weeks from praise to closure

On Thursday Netflix confirmed it is closing Night School Studio and the Helsinki team Moonloot Games, and cutting an undisclosed number of roles across its games staff [4][3]. Night School was the first studio Netflix ever bought, acquired in 2021 as it entered games [3]. Its last game, the phone-controlled horror title Unhinged, had shipped roughly six weeks earlier, on 30 June [1][2]. Moonloot, founded in 2022, never shipped anything under Netflix ownership [3][2].

Four weeks before the closure, on the 16 July earnings call, Netflix co-CEO Gregory Peters named Unhinged as evidence the strategy was working. It and the company’s FIFA World Cup game were “our two most successful cloud game debuts, really solid numbers,” he said, putting them in the top tier of Netflix game performance [2]. The FIFA game was built by Refactor Games, which cut 85% of its staff in early August after its parent reportedly pulled funding [3][2].

Next Games, bought in 2022 for about 65 million euros, is now the only internal studio Netflix has left, alongside the in-house team that signs outside developers [3][2]. Netflix has cancelled six announced games, removed more than 20 titles including Hades and Monument Valley, and shut or sold every other studio it owned [3][2]. Spry Fox bought itself back [2].

What the pattern says Netflix wants

The company says it will now concentrate on kids gaming, party games, story-driven fare, and games with mainstream hooks [1][3]. That list is close to the five casual titles it launched with in 2021 [1].

One number explains the direction better than the statement does. Netflix Playground, its kids app that went global in April, tripled its daily player count, a 600% year-on-year rise in what Netflix calls kids’ engagement [3]. Playground counts returning players. A well-reviewed narrative game counts finished ones.

Polygon’s read is that the recent three-pronged slate was designed as a test [1]. A party game, a sports game, a prestige project: which would subscribers actually choose [1]? Amazon has made the same turn with Luna, going hard on celebrity-led party games; Apple Arcade has slowed its prestige work in favour of IP-driven kids titles [1]. A Grand Theft Auto 6 presentation will debut exclusively on Netflix. Polygon notes it will almost certainly look like a success “on a raw metrics level,” and that this is dangerous for a company prone to sudden turns [1].

A scoreboard that rewards the return, not the ending

The week’s sales figures pointed the same way. Halo: Campaign Evolved is a ground-up remake of one of the most loved shooter campaigns ever made. It sold about 1.2 million copies in two weeks for roughly $67m gross [6][5]. The split was 42% Xbox, 41% PlayStation 5 and 17% Steam [6]. It also drew around 2.1 million players on Game Pass, about 600,000 of whom paid $20 more to start five days early [5]. IGN scored it 7 out of 10 [6].

Two ports of ageing Call of Duty: Black Ops games have reportedly taken $435m between them, outselling the Halo remake 16-to-1 [5]. Alinea analyst Rhys Elliott named the difference plainly. The remake left out, he said, “the one thing that turned two ancient COD ports into a half-billion-dollar phenomenon” [5]. That thing is multiplayer.

Elsewhere, Alan Wake 2 has finally cleared 3 million sales, nearly three years after release [16]. Its launch sold 1 million against a reported 70 million euro budget and marketing spend [16]. Embark’s Arc Raiders took $114.9m inside Nexon’s second quarter alone and has now passed $552.8m since launch [15]. Marvel Tokon: Fighting Souls sold an estimated 485,000 copies in about a week [18]. Pearl Abyss sold 2.11 million copies of Crimson Desert in the quarter for $96m [17]. Its operating revenue still fell 41.4% quarter on quarter as the launch window closed [17].

The bill, in people

Supermassive Games, maker of Until Dawn and The Quarry, opened a redundancy consultation covering up to 75 roles [10]. It is the studio’s third round in three years, after 36 cuts in July 2025 and around 90 in early 2024 [10]. It comes three months after Directive 8020 shipped [10].

At Bethesda’s Rockville office, union members planted one red flag for every developer laid off under Xbox CEO Asha Sharma [11]. They parked a giant inflatable rat on the lawn, timed to her visit [11]. Xbox is cutting 3,200 jobs by the end of its financial year, its fifth round of mass layoffs in three years [11].

The counter-example is Blizzard. In an email to staff that leaked, president Johanna Faries said it closed its 2025-26 year as Xbox’s best-performing studio [12]. She said it posted its third-best revenue figure ever, and two straight years of growth for the first time in nearly a decade [12]. It got there on expansions people wanted more of: an Overwatch reboot, and a first Diablo 2 expansion in 25 years [12]. Player housing came to World of Warcraft, and Diablo 4 got a second expansion [12].

Money leaving, money arriving

Alibaba is selling its game developer Lingxi to private equity firm Trustar Capital as it points money and management at AI and cloud instead [13][14]. Bloomberg puts the deal at $1.5bn or more; Reuters reports Alibaba expects to reap more than $2bn [14][13]. Lingxi’s chief executive told staff the management team stays [13].

Money arrived elsewhere. Mattel launched Mattel Game Studios, uniting almost 300 games staff across Los Angeles and Hangzhou, shortly after buying Mattel163 from NetEase at a $318m valuation [22]. 2K opened Small Axe Studios in Vancouver to build its next big sports franchise [23]. It is led by Aaron McHardy, who spent nearly 18 years at EA on Madden, College Football and FIFA [23].

The machinery of the second hour

The tools tell you what is being optimised. Commerce firm Xsolla launched a publishing suite aimed squarely at what happens after a player has already paid [9]. It offers a studio-owned community hub, no-code templates for seasonal events, and launcher notifications for offers [9]. “This release is about what happens after the first sale,” said president Chris Hewish [9].

The spending numbers rhyme. Sensor Tower reports 89% of GTA 6 preorders are for the $100 ultimate edition rather than the $80 standard one, 90% on Xbox and 88.5% on PlayStation [7]. The firm’s Karl Kontus says the usual premium share is 10-20%, that 50% would be a great number, and that he has “never seen a 90% premium share before” [7]. He expects it nearer 50/50 once casual buyers arrive [7]. India passed $1bn for the first time in 2025, up 14.8% to $1.04bn, but across 511 million players, which works out at $2.04 a head [8]. Sony, meanwhile, says 82% of its games sold in April to June were digital, and will end discs in 2028 [19].

The purest version of the machine is not in games at all. Pennsylvania’s “skill games” avoid gambling law because a losing spin can be recouped by finishing a memory puzzle. The New York Times played one: it took 9 minutes 50 seconds and earned 3 cents [20]. The state Supreme Court ruled in June the machines cannot be told apart from slot machines, with a 120-day grace period, and lawmakers are racing to save them [20].

One story ran the other way. Wolf Haus, a twelve-person studio with roots in indie film, is building a large open-world cult simulator with no generative AI [21]. It took 80 pitches before Krafton and Lifelike Capital funded it [21].