Netflix’s gaming ambitions hit another hurdle with layoffs at Night School Studio, the indie developer behind the critically acclaimed Oxenfree series. The undisclosed number of job cuts, which occurred in January 2025, have sparked fresh concerns about the company’s long-term commitment to its gaming initiatives.
This development follows the unexpected October 2024 shutdown of Netflix’s AAA game studio, Team Blue, which operated for just two years, despite having never released a single title. The studio’s sudden closure came shortly after the appointment of Alain Tascan, former EVP of Development at Epic Games, who was brought on to drive Netflix’s gaming division, with a bold vision to “redefine the future of gaming.” However, with two major studio shakeups in as many months, Netflix’s gaming strategy now seems increasingly uncertain.
Night School Studio, acquired by Netflix in 2021, was anticipated to play a significant role in the company’s gaming expansion. The studio’s Oxenfree II: Lost Signals was released in 2023 to positive reviews, but Netflix kept its player engagement metrics under wraps, making it difficult to gauge its impact. While Netflix has been tight-lipped about future plans for Night School Studio, sources from Game Developer indicate that the layoffs will not disrupt the studio’s ongoing projects.
Despite these challenges, Netflix remains committed to expanding its gaming portfolio, offering over 80 mobile games on its platform, with further expansion into PC and TV gaming. Adding further complexity, Netflix has been placing increased focus on generative AI in gaming. Under the leadership of Mike Verdu, who now heads the GenAI division, the company plans to leverage AI to “accelerate development” and deliver “mind-blowing new experiences” for players. While the potential of GenAI is exciting, the lack of specifics on its application has left many wondering the company is doubling down on innovation or pivoting away from traditional game development.
As Netflix continues to reassess its approach, it remains unclear whether the layoffs signal a routine restructuring or the beginning of a strategic shift away from large-scale game development and external collaborations. For now, the company’s gaming strategy appears to be in flux as it reassesses its position in an increasingly competitive market.
Words by Khushboo Malhotra
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