Netflix Shuts Down Night School Studio and Moonloot Games, Restructures Gaming Division and Reshapes Its Entertainment Business Mix

Streaming giant Netflix is closing two inhouse game studios, LosAngelesbased narrativefocused Night School Studio and Helsinkifounded Moonloot Games, alongside headcount reductions across its internal gaming teams. These organizational moves mark a further pullback from heavy firstparty game development and bring material shifts to Netflix’s overall entertainment business portfolio.

The closure of Night School Studio draws particular industry attention. Only six weeks prior, the studio launched Unhinged, a cloudstreamed horror title playable directly on TV sets. Netflix CoCEO Greg Peters publicly praised the title during an investor call, citing “really solid numbers”. Acquired by Netflix in 2021, Night School built its reputation on awardwinning indie franchise Oxenfree, Oxenfree 2: Lost Signals, and an interactive game tied to hit series Black Mirror. It stood as one of Netflix’s cornerstone internal studios at the early stage of its gaming initiative.

Founded in 2022, Moonloot Games was led by industry veteran Marko Lastikka, formerly with EA and Zynga. The Helsinki team had been working on an unreleased lifesimulation project similar to Animal Crossing, which will not see official launch. Netflix confirmed additional role cuts within its broader gaming division without disclosing exact layoff figures.

“Games remain an opportunity for us to expand the variety of entertainment we offer Netflix members. We see an opportunity to be more focused in our execution, so we are making organizational changes to match those priorities,” a Netflix spokesperson commented. “We are incredibly grateful to the talented colleagues we are saying goodbye to today. We thank them for all their contributions to Netflix and wish them the best.”、

Farreaching Impacts on Netflix’s Business Mix

This round of studio shutdowns follows a string of prior consolidations across Netflix Games. Previously, Netflix closed AAAfocused Team Blue, Boss Fight Studios (creator of Squid Game: Unleashed), and divested cozygame studio Spry Fox back to its founders in December 2025. After the latest restructuring, Helsinkibased Next Games remains Netflix’s sole surviving internal firstparty game studio.

Netflix has stepped away from its earlier aggressive expansion strategy of acquiring and building multiple inhouse development teams. Its business mix is shifting toward an assetlight model leaning heavily on external developer partnerships, IPtied interactive experiences and TVoptimized cloud gaming. Resources are now concentrated on four strategic pillars: kids’ titles, couchfriendly party games, mainstream massmarket games and narrativedriven interactive stories. Flagging examples include FIFA World Cup: Launch Edition and Netflix Playground, a dedicated kids app which delivered a 600% yearoveryear jump in youthaudience engagement postlaunch.

For Netflix, games operate as a valueadd subscriber perk rather than an independent revenue stream, designed chiefly to boost household retention and diversify entertainment offerings. With shrinking internal development capacity, thirdpartyproduced games will occupy a larger share of Netflix’s gaming catalogue moving forward. Inhouse original game output will shrink in scale; interactive content will increasingly function as supplementary extensions to Netflix’s film and television IP library, complementing its core streaming business.

The restructuring unfolds amid widespread studio consolidation across the global games industry, with Sony, Microsoft and Embracer also carrying out studio divestments and workforce adjustments. Netflix’s latest changes highlight the challenges streaming platforms face when building fullscale inhouse game operations: heavy capital investment and long development cycles make pure firstparty game development hard to align with streamingoriented business logic.

Netflix stresses it is not exiting gaming entirely, but reallocating resources. Games will keep being included in subscriber benefits, supporting cloudstreamed gameplay on television hardware with mobile phones as controllers. Market observers note that postrestructuring, Netflix’s overall business portfolio will tilt further toward its core filmandtelevision streaming business, with games taking on a supporting, valueenhancing role.