Netflix Closes More Game Studios as it Abandons its Broader Gaming Strategy

Netflix is scaling back its gaming ambitions as layoffs continue, while ARC Raiders is preparing a major update with a new map, enemies, progression systems, and player outposts.

Netflix is restructuring its gaming business again, and this time the changes are bringing more studio closures and layoffs. The company is shutting down Night School Studio, the developer best known for Oxenfree, only around six weeks after the release of its latest game, Unhinged. 

Night School holds a notable place in Netflix's gaming history because it was the first studio the company acquired. Netflix purchased the California-based developer in 2021 after the studio had built a strong reputation with Oxenfree, its 2016 narrative adventure. 

Night School later developed Oxenfree 2: Lost Signals, the Black Mirror mobile spin-off Thronglets, and Unhinged, which became an especially interesting project because it was designed around Netflix's cloud gaming technology.

Unhinged used a player's phone as both a controller and the protagonist's phone inside the game, creating an experience specifically suited to Netflix's gaming ecosystem. 

The concept showed how the company could use its existing technology in ways that traditional game platforms might not, but the studio behind it is now being shut down only weeks after launch. Moonloot is also being closed, with the Finnish developer reportedly working on a life simulation game inspired by Animal Crossing before the shutdown.

Netflix says the latest changes are part of another shift in its gaming strategy. The company now wants to focus more heavily on party games, story-driven titles, children's games, and projects with broader mainstream appeal, including its planned FIFA World Cup game. 

The problem is that this is not the first time Netflix has changed direction. The company previously made major investments in AAA development, including the creation of an internal studio known as Team Blue. Netflix brought in major industry veterans for that project, including former Overwatch executive producer Chacko Sonny, Halo veteran Joseph Staten, and former Sony Santa Monica art director Raphael Grassetti.

Despite those ambitions, Netflix shut Team Blue down in October 2024 before the studio released a game. Those developers subsequently left, while Night School also reportedly experienced layoffs in 2025. 

The recent shutdowns highlight yet again the tricky relationship between big tech and game development, where projects can take many years to come to fruition but corporate strategies can shift much more quickly.

A big game can take five, six, even seven years to complete, but a company’s priorities can change in months. 

The studio might spend years trying to develop a game around one strategy, and then the executives decide that what is important now is a different market or type of product. The game itself may still be progressing well, but the corporate strategy surrounding it has changed, leaving developers and projects in a difficult position.

While Netflix is scaling back and reorganizing, ARC Raiders is preparing to expand in the opposite direction with its next major update. Embark has announced that Frozen Trail will launch on October 8 and is being described as the biggest update ARC Raiders has received since launch. 

The centerpiece of Frozen Trail is an entirely new map that takes players beyond the mountains into a frozen settlement on the edge of the Rust Belt. The area once contained villages, factories, research facilities, and an observatory before it was abandoned. 

The map is still being developed, with Embark recently completing another round of user experience testing and using the results to make further adjustments. The frozen setting should also give ARC Raiders a different visual atmosphere while keeping the abandoned-world style that already defines the game. 

Frozen Trail is not stopping at a new map, either. The update will introduce an entirely new ARC operation designed specifically for experienced players. Embark is keeping many of the details hidden for now, but the studio describes the activity as one of the most intense experiences it has created for the game so far, with an emphasis on meaningful decisions, dynamic encounters, cooperation, combat, risk management, and survival.

That description makes it sound like a serious high-level challenge rather than another routine raid. Players are expected to make decisions that carry more weight while dealing with unpredictable encounters and the usual risks of ARC Raiders. 

New enemies are another major part of Frozen Trail. 

Embark has teased several new ARC machines, including smaller, highly mobile enemies and much larger machines that can stop Raiders. Creating these enemies is also a lengthy process, with the studio developing everything from the original concept and animations to behavior and the machine-learning systems that help give the machines their distinctive movements and personalities.

That means the update is already bringing three major additions: a new map, a high-level ARC operation, and new enemy types. However, the fourth part of the update could have an even bigger impact on ARC Raiders over the long term because Embark is also expanding the game's progression systems.

One of the studio's goals is to give players more reasons to continue developing their Raiders over longer periods instead of simply completing another raid for the sake of completing another raid. Frozen Trail introduces the Outpost, giving players their own space on the surface rather than forcing them to spend all their time underground. 

The Outpost could become an important part of the game's progression depending on how deeply Embark connects it to other systems. If it is simply a place to add furniture and decorations, it will provide some personalization but may not dramatically change the experience. 

That would make successful raids feel more meaningful because the rewards would not simply be numbers increasing on a screen. 

You could gradually watch your space develop as your Raider becomes more capable and your progression continues. The existing skill tree is also being adjusted to give players more control over the type of Raider they want to build, while Raider decks are being reworked to make them more engaging and rewarding.

The difference between the two stories is clear. Netflix is dialing back its gaming ambitions after spending a lot of money on studios and talent, while Embark is getting ready for a big expansion for ARC Raiders that’s supposed to add content and give players more reasons to stick with the game. 

For Netflix, the latest closures show just how difficult it can be for a large technology company to build a sustainable gaming strategy when priorities change faster than games can be developed. For ARC Raiders, Frozen Trail will provide an important test of Embark's new approach to updates. 

With a new frozen map, tougher enemies, a high-level operation, expanded progression, and customizable outposts arriving on October 8, the update could significantly change how players experience the game after launch.