Netflix is closing Night School Studio, the Los Angeles-based developer behind the supernatural thriller Oxenfree, marking a contraction in the streaming giant’s internal video game development division. According to reporting by Game File and subsequent industry coverage, the closure comes alongside plans to shutter Moonloot, a smaller studio founded in Helsinki in 2022, leaving Netflix with just one remaining first-party game studio.
The organizational changes arrive after Netflix entered the games market in 2021 with mobile titles bundled into standard subscriptions. Company representatives confirmed the closures in a public statement, pointing to a strategic shift toward four specific gaming categories: party games, kids games, story-driven titles, and games featuring mainstream hooks, such as its recently released FIFA game. “We see an opportunity to be more focused in our execution, so we are making organizational changes to the business to match those priorities,” a Netflix spokesperson told Game File.
Alongside the studio closures, Netflix implemented an unspecified number of layoffs within its internal games team. The move signals a retreat from owned game development for the subscription video-on-demand pioneer, which has dismantled or spun off internal development footprint over the last several years.
The Rise and Fall of Night School Studio
The shuttering of Night School Studio carries friction given its recent release schedule. Founded in 2014 by Sean Krankel and Adam Hines, the studio became Netflix’s first game studio acquisition on September 28, 2021. Netflix executives hailed the purchase at the time as a cornerstone for building out internal creative capabilities.
Under Netflix ownership, Night School released Oxenfree II: Lost Signals in 2023, followed by the mobile game Thronglets tied to the Black Mirror franchise, and finally Unhinged, a 30-minute first-person horror title built specifically for Netflix’s cloud TV streaming. Just six weeks before the studio’s closure, Unhinged shipped to players.
The timing confounded industry observers because of how Netflix leadership talked about the game’s commercial traction just weeks prior. During the company’s Q2 2026 earnings call on July 16, 2026, co-CEO Greg Peters told investors that both FIFA and Unhinged had become their 2 most successful cloud game debuts, generating solid numbers that placed them in top-tier performance brackets. Four weeks after Peters lauded those metrics, the studio behind Unhinged was slated for closure.
Shrinking First-Party Development and the Pivot to Cloud TV
Night School’s closure represents the latest step in a rollback of Netflix’s owned-studio strategy. The company previously closed Team Blue—a Southern California studio staffed with industry veterans from major shooter franchises—in October 2024 before it shipped a game. That was followed by the October 2025 closure of Boss Fight Entertainment, which had developed a tie-in title for the series Squid Game, and the December 2025 sale of cozy-game developer Spry Fox back to its original founders.
Following the closure of Night School and the planned wind-down of Moonloot, Netflix’s internal studio roster has dwindled to just one remaining entity: Next Games, a Helsinki-based studio that produces party games. This streamlined structure mirrors how Netflix operates its core film and television business, relying primarily on external production partners and third-party commissioners rather than maintaining heavy internal infrastructure.
The organizational pivot aligns with a broader technical transition away from mobile downloads and toward cloud-streamed TV gaming, where users play on television screens while utilizing their smartphones as controllers. On the July earnings call, Peters reported that monthly active players for cloud games had expanded 11-fold since scaling up the initiative, with user retention ahead of the mobile games curve. Peters also highlighted kids’ gaming as a growth engine, noting that daily players on the ad-free Netflix Playground app had tripled since launch.
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