Netflix has officially closed two of its internal game development studios, Night School Studio and Helsinki-based Moonloot Games. The company confirmed the shutdowns on Tuesday, marking a significant pullback from its ambitious expansion into the video game market.
The closures affect both entities entirely, with all ongoing projects being cancelled and staff members laid off. Night School Studio, which was acquired by Netflix in 2021, was best known for the critically acclaimed narrative adventure game *Oxenfree* and its sequel. Moonloot Games was a smaller Finnish studio that Netflix had been quietly supporting.
Background of the Studios
Night School Studio was founded in 2014 by Sean Krankel and Adam Hines. The studio gained widespread recognition for its debut title, *Oxenfree* (2016), a supernatural thriller that was praised for its dialogue system and atmospheric art style. Following its acquisition by Netflix in September 2021, the studio became the first games developer to fully integrate into the streaming platform, with the goal of creating exclusive titles for mobile and cloud platforms.
Moonloot Games, headquartered in Helsinki, Finland, was added to Netflix’s portfolio later. The studio was primarily focused on developing original games for the streaming service, having been established as part of Netflix’s broader push to diversify its content offerings beyond film and television.
Strategic Shift in Netflix’s Gaming Division
The decision to shutter both studios signals a sharp reversal in Netflix’s gaming strategy. Between 2021 and 2022, the company acquired five game studios, including Boss Fight Entertainment and Next Games, in an effort to compete with Apple Arcade and other subscription-based gaming services.
Industry analysts note that the closures reflect a significant financial reassessment within the company. Netflix has been under increasing pressure to improve profitability across all business segments, and the gaming division has reportedly faced challenges in retaining users and generating revenue from its titles. The move also follows a broader trend in the technology sector, where major corporations have scaled back non-core ventures in response to economic uncertainty.
The company has not yet released an official statement detailing the specific reasons for the closures, but internal sources suggest that the focus is shifting away from original, high-cost development. Instead, Netflix may pivot toward licensing existing games or partnering with established third-party developers to populate its cloud gaming service, which remains in its infancy.
Employee Impact and Industry Reaction
The layoffs are expected to affect dozens of employees across both studios. Night School Studio had a team of approximately 30 people, while Moonloot Games had a smaller workforce. Affected employees received standard severance packages, consistent with the procedures used in the earlier closures of Boss Fight Entertainment.
Reactions within the game development community have been largely somber. Night School Studio was considered a creative beacon in the indie scene, and its closure has raised concerns about the sustainability of studio acquisitions by non-gaming conglomerates. Several developers have publicly expressed disappointment, noting that the teams were actively working on new titles prior to the shutdown.
Market Implications
This development is a notable setback for Netflix’s ambition to become a major player in the gaming industry. Despite significant investment, the subscription-based gaming library has not achieved the same level of adoption as the company’s video streaming service. Data from mobile app analytics firms indicates that Netflix’s games have struggled to break into the top charts, partly due to limited discoverability within the main Netflix application.
For the broader gaming industry, the closure highlights the volatility of reliance on external corporate funding. It also serves as a warning to smaller studios considering acquisition offers, as economic downturns can lead to rapid divestment and operational shutdowns.
What Happens Next
Netflix is expected to announce further details regarding the future of its remaining internal studios, including the well-known Boss Fight Entertainment and Next Games. While those studios continue to operate, the company may reduce its overall internal development footprint.
Going forward, the streaming giant is likely to focus its gaming resources on lighter, mobile-first experiences that integrate directly with its existing intellectual properties, such as *Squid Game* and *Stranger Things*. No official timeline has been provided for the complete wind-down of operations at Night School Studio and Moonloot Games, but all active development has ceased immediately.
Source: GamesIndustry.biz
