Please ensure Javascript is enabled for purposes of website accessibility

Netflix Dips Its Toes in Interactive Content to Prompt Loyalty Among Subscribers

By Natalie Walters - Updated Apr 15, 2019 at 9:46PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Netflix is experimenting with new show formats to keep its subscribers happy and entertained.

Check out the latest Netflix earnings call transcript.

Netflix (NFLX -0.69%) is under increasing pressure to set its content apart as competition heats up in the streaming market. That includes the release of its first adult interactive show, Black Mirror: Bandersnatch, at the end of 2018. Due to the number of times the show lets viewers choose what happens next, it's estimated that there are over one trillion story combinations. 

The streaming giant has over 130 million global subscribers, but it knows how fickle viewers can be. If Netflix can't keep its subscribers entertained, they can easily switch their subscriptions to any of the other growing video platforms, including Disney's (DIS -0.28%) new platform that's due out in late 2019.

The Netflix homescreen shows an ad for its original series "Stranger Things."

Netflix is experimenting with new show formats to keep things interesting. Image source: Netflix.

Netflix tests the water with an adult interactive show

While Bandersnatch is the first adult interactive show on Netflix, the streaming giant had previously tested the show format out on different children's projects. The first-ever children's interactive show on Netflix launched in April 2016 with Kong: King of the Apes, which included episodes that only unlocked after you had watched certain episodes.

But while Kong had interactive elements, it didn't allow children to choose how an episode progressed or ended. That didn't come to Netflix until the summer of 2017, when the children's show Puss in Book allowed kids to choose whether they wanted to see the protagonist fight a god or a tree.

These "choose your own adventure" shows are still rare because production is longer, more complicated, and much more expensive compared to a normal series -- the scripts are longer to cover the multiple story options. The movie Bandersnatch can last anywhere from 40 minutes to 90 minutes depending on which story options the viewer chooses through the program.

Releasing an adult "choose your own adventure" show like Bandersnatch has come with more pressure. But Netflix seems to have come out on top. Since its release on Dec. 28, Bandersnatch has inspired a community of online sleuths to discuss all of the different possible endings and to discuss different "Easter eggs," a common term for hidden messages or inside jokes in movies or TV shows. 

Netflix must innovate to defend against competition

Disney's launch date for its family friendly streaming platform Disney+ is approaching. Netflix knows that viewers don't feel particularly loyal or attached to video platforms because it's not a personal experience. Viewers can easily click "unsubscribe" from one platform and "subscribe" to a new platform without ever interacting with a Netflix employee.

In order to create loyal viewers who won't jump ship when Disney's platform launches, Netflix must facilitate emotional attachments between its shows and its viewers. In other words, Netflix needs more passionate fandoms like the one behind its hit original series Stranger Things, which will come out with its third season July 4.

That's why interactive content that requires viewers to be actively engaged is worth the extra effort for Netflix. With Bandersnatch, users must be engaged with the show because they're helping decide what happens next at crucial points in the plot. In this sense, watching a series becomes an activity, rather than a passive viewing experience. This explains why Bandersnatch seems to have created a deeper emotional attachment with viewers, inspiring online communities around the discussion of the different storyline possibilities. 

Interactive content doesn't help Netflix's debt problem

It's worth mentioning that the one thing interactive content won't help Netflix with is its ongoing debt problem. Unfortunately, as noted, these complex scripts require higher budgets to accommodate the longer production periods. That's not what investors want to hear about a company that last reported $18.4 billion in both long-term debt and shorter-term obligations, according to its last quarterly report.

Netflix continues to be confident that if it spends big money on content now, its hit shows and films will eventually draw in enough subscribers that everything will balance out. But, so far, it continues to dig a deeper and deeper hole of debt. The company's long-term debt alone hit $8.3 billion during the third quarter, up from $4.9 billion a year earlier. And Netflix has already warned investors that its 2019 content spend would be higher than the $8 billion it spent in 2018.

So as you see more interactive content pop up on Netflix this year, enjoy the innovative show format that's sure to create some new fandoms and even lure in some new subscribers. But also keep in mind the cost of such shows and whether this is the best option for a company struggling with debt. 

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$178.36 (-0.69%) $-1.24
The Walt Disney Company Stock Quote
The Walt Disney Company
$95.65 (-0.28%) $0.27

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.