Netflix is preparing to close two more internal game studios, including Night School Studio, the acclaimed developer behind Oxenfree, according to a new report from Game File.
The reported shutdowns mark another significant retreat for Netflix’s gaming division, which has spent the past several years trying to establish itself as more than a streaming-video company. The second studio said to be affected is Moonloot Games, a Helsinki-based developer that Netflix formed in 2022 as part of its push into original mobile games.
Netflix has not formally announced the closures, and the company did not immediately offer public details about the number of employees affected. But the reported move lands at a difficult moment for the games business, which has endured waves of layoffs, studio closures and project cancellations across both major publishers and independent developers.
Night School’s inclusion is particularly notable. Founded in 2014, the studio earned a strong critical reputation with Oxenfree, a supernatural narrative adventure praised for its dialogue system, atmosphere and character-driven storytelling. The game developed a dedicated following and helped cement Night School as one of the more distinctive voices in the indie narrative space.
Netflix acquired Night School in 2021, making it one of the streamer’s first major game-studio purchases. At the time, the deal signaled that Netflix was serious about building a slate of interactive entertainment that could sit alongside its film and television ambitions. The acquisition also gave Netflix an established creative team with proven expertise in story-first games, a natural fit for a company built on scripted entertainment.
The studio later released Oxenfree II: Lost Signals under Netflix’s gaming banner. Like the original, the sequel leaned into eerie mystery, intimate character work and a cinematic sensibility that aligned closely with Netflix’s brand. But critical goodwill has not necessarily translated into broader traction for Netflix Games, which remains a relatively small piece of the company’s overall consumer relationship.
A strategic pullback
Netflix launched its gaming initiative with an unusual distribution model: games are included with a Netflix subscription and are available without ads or in-app purchases. The approach was designed to create added value for subscribers rather than immediately build a standalone games business.
That strategy gave Netflix room to experiment. The company released licensed titles connected to hit series, brought notable indie games to mobile and acquired or built studios to develop original projects. Its library has included games tied to Stranger Things, Too Hot to Handle and other Netflix properties, as well as outside titles that gave the service more credibility among players.
Still, the central challenge has been engagement. Netflix has more than 270 million paid memberships globally, but only a fraction of that audience has historically interacted with its games. For a company known for measuring retention, watch time and subscriber behavior with intense precision, the gaming division has had to prove that it can meaningfully strengthen the broader platform.
The reported closures suggest Netflix is reassessing where it wants to place its bets. The company has recently shown greater interest in games connected to recognizable entertainment franchises and in technology that could eventually bring interactive experiences to televisions and other devices beyond mobile. That may leave smaller, auteur-driven studios in a more vulnerable position, even when their creative credentials are strong.
Moonloot’s reported closure underscores how quickly priorities can change. Netflix established the Helsinki studio just two years ago, positioning Finland as an important hub in its gaming expansion. Helsinki has long been a key city in mobile games, home to major developers and a deep talent pool. Creating a studio there made strategic sense when Netflix was building out its infrastructure aggressively.
But the broader market has shifted. After a pandemic-era boom, the games sector has entered a severe correction. Companies including Microsoft, Sony, Electronic Arts, Take-Two, Embracer Group and multiple independent studios have cut staff or shut down teams. Rising development costs, investor pressure and slower growth have forced companies to rethink pipelines that were expanded during more optimistic years.
Why it matters
The possible shutdown of Night School carries symbolic weight because it raises questions about the future of original, narrative-driven games inside large entertainment conglomerates. Netflix’s entry into gaming was watched closely by Hollywood and Silicon Valley alike. If a streamer with global scale, deep pockets and a storytelling-first identity struggles to sustain respected internal studios, it may make other media companies more cautious about building their own game-development operations.
For creators, the news is another reminder that acquisition can provide resources and visibility, but it does not guarantee long-term stability. Indie studios often join larger companies with the hope of gaining financial security while preserving their creative identities. In the current climate, even well-liked teams with strong brands can become casualties of corporate reorganization.
For Netflix, the reported closures do not necessarily mean the company is abandoning games. The streamer has repeatedly framed gaming as a long-term initiative. But the shape of that initiative appears to be evolving. Rather than maintain a broad portfolio of internal studios pursuing varied creative paths, Netflix may concentrate on fewer projects with clearer links to subscriber engagement, major intellectual property or scalable technology.
That shift would mirror a familiar pattern in entertainment: experimentation gives way to consolidation once executives demand evidence of impact. Netflix disrupted Hollywood by taking big swings on content and distribution, but games operate by different rules. Development timelines are long, hit rates are unpredictable and audience habits are difficult to change.
The report also arrives as Netflix continues to emphasize profitability and discipline after years of rapid spending. The company has cracked down on password sharing, introduced advertising tiers and become more selective in programming decisions. A leaner approach to games would fit that broader corporate mood.
What Happens Next
All eyes will now be on Netflix for confirmation and clarity. Employees, players and industry observers will be looking for details on how many jobs are affected, whether any unfinished projects will survive and what happens to the Oxenfree franchise.
The larger question is what Netflix wants its gaming identity to be. If the company continues to invest, expect a stronger focus on games that extend Netflix series, encourage repeat subscriber engagement or work across devices in ways that feel native to the platform.
For Night School and Moonloot staffers, the immediate future is far more personal. In a bruising year for game developers, another round of studio closures means more talented creators entering an already crowded job market. For Netflix, it is a pivotal test of whether its gaming ambitions can move from experimentation to a sustainable business with a clear creative purpose.