Netflix Inc (NASDAQ:NFLX) Reed Hastings never misses the chance to tout the advantages of Internet TV.

The streaming pioneer gives viewers the opportunity to binge-watch a TV season as soon as it becomes available and allows them to watch whenever, wherever, and on a device of their choosing. Those are all features that have made Netflix one of the most successful stocks of the 21st century -- but its latest innovation may be the best example yet of the power of Internet TV.

Netflix's office in Los Angeles

Image source: Netflix.

The wide world of children's entertainment

If you were an 80s kid like me, you probably got wrapped up in a few Choose-Your-Own-Adventure books. The series of children's novels launched in 1979 and gave young readers the opportunity to choose the destiny of the main character, often the reader, as each chapter offered a different outcome. The genre dominated children's books through the 80s, and eventually transitioned to video and computer games, where it was even more addictive. TV producers have long sought a way to bring the concept to the small screen with an interactive children's television show, but have been unable to do so until now.

Netflix just launched two choose-your-own-adventure series for kids, "Puss in Book: Trapped in an Epic Tale," available now, and "Buddy Thunderstruck: The Maybe Pile," which will hit screens on July 14. 

The leading streamer worked for two years on the format, which offers the viewer a choice in the show's direction at pre-selected points in the plot, asking viewers in "Puss" questions like "Should these bears be friends or foes?"

Netflix is releasing one "branching" episode of each show, with "Puss" offering 13 different decision points with two endings, lasting anywhere from 18 to 39 minutes. "Buddy" has eight decision points and lasts an average of 12 minutes, though it has the option of an endless feedback loop if viewers choose accordingly.

Separating itself from the competition 

Netflix likes to refer to such programming as "non-linear TV," separating itself from the competition, which has to make shows according to prescribed time slots and schedules. But the choose-your-own-adventure concept may be the best example of Netflix's competitive advantage over linear TV rivals such as Time Warner's (NYSE:TWX) HBO and CBS's (NYSE:CBS) Showtime. Both of those premium networks offer their own streaming services, HBO Now and Showtime Anytime, but because their content is still consumed through cable, they can't do things like offer binge-watching or interactive TV, like "Puss."

The size of Netflix's customer base also provides it with an advantage over streaming-only competitors like Amazon (NASDAQ:AMZN) Video and Hulu which don't have as many viewers to subsidize this kind of expensive original content, though Amazon is fast increasing its programming budget. "Puss," for example, has three thousand different permutations for what can happen in the story, meaning such episodes have much more content than a user will experience the first time.

"Puss" has received mostly positive reviews since its launch on Tuesday. Netflix did extensive research prior to launching the format, finding that parents want their children to make decisions and interact with the show.  

Netflix has a third branching narrative, "Stretch Armstrong: The Breakout" scheduled to launch next year, but its plans for the format beyond that are unclear. The company's Director of Product Innovation Carla Engelbrecht Fisher said: "We're looking forward to learning and seeing where the path takes us."

One thing is clear though. Netflix will continue to innovate with programming like "branching narratives" and leverage the power of Internet TV. That should ensure that its subscriber base keeps growing and help it further separate itself from rivals like HBO.

 

Jeremy Bowman owns shares of Netflix. The Motley Fool owns shares of and recommends Amazon and Netflix. The Motley Fool recommends Time Warner. The Motley Fool has a disclosure policy.