Based in Helsinki, Finland, it will be led by former Zynga and Electronic Arts executive Marko Lastikka.
Netflix has previously purchased small gaming companies, such as Oxenfree developer Night School Studio.
But the streaming giant is now going further and creating a studio from scratch.
Lastikka is an established figure in gaming, having co-founded Zynga studio – also in Helsinki – which worked on FarmVille 3 under his leadership.
Amir Rahimi, Netflix VP of Game Studios, announced the “vision to build a world-class games studio” in a blog post.
“[It] will bring a variety of delightful and deeply engaging original games, with no ads and no in-app purchases.”
In April, Netflix announced a loss of 200,000 subscribers, it first quarterly loss since 2011. Its share price dropped by 35%, wiping more than $50bn (£46.5bn) off the firm’s market value.
Netflix then lost almost a million subscribers between April and July 2022, the biggest in its history, though it still has more than 220m subscribers worldwide.