Bandersnatch is Netflix's (NASDAQ:NFLX) latest hit movie -- if you can even call it a movie. Bandersnatch is part-movie, part-game, and it allows viewers to direct the action through interactive choice. Different scenes play depending on the choices that viewers make, and different decisions lead to entirely different endings.

The choose-how-the-action-unfolds style of Bandersnatch is reminiscent of a style of video game most associated with now-defunct studio Telltale Games. Telltale's choice-based games were critical hits, but the studio didn't survive. But there is reason to believe that Netflix's use of the model might work better, which may be why Telltale Games and Netflix were teaming up before the former's untimely demise.

A man plays a video game

Image source: Getty Images.

Telltale Games didn't make it

To be fair, the demise of Telltale Games is not purely an indictment of the profitability of choice-based games. Toxic management also reportedly helped drive Telltale Games into the ground.

One of the complaints levied against management was its aversion to changing gameplay in ways that departed from the basic choice-based system Telltale Games specialized in. The final straw for Telltale Games was a failed round of funding; the profits from The Walking Dead video game were not, apparently, enough for Telltale Games to survive and grow.

But Netflix has a leg up

Telltale Games' model was pretty typical of a video game studio: it partnered with a publisher to release games that were sold individually. Telltale Games did participate in some video game streaming services, such as Nvidia's GeForce Now, but such streaming services are just a small fraction of the current market. Services like Nvidia's may be the future of gaming, but right now physical and digital download sales remain the norm, and there are reasons to be skeptical that the big, bright future of video game streaming is coming anytime soon. Telltale Games needed sales, and it didn't get enough of them to overcome its other issues.

Before its demise, though, Telltale Games was trying out a new partnership with Netflix. Together, the two companies were working on a choice-based interactive film called Minecraft: Story Mode. That project was later completed and released on Netflix, though not to much fanfare.

The fanfare is here, however, for Netflix's more recent choice-based project. Bandersnatch is getting solid reviews, lots of attention on social media, and lots of write-ups in traditional media. Netflix hasn't shared numbers, but Bandersnatch seems to be a hit, and it could prove to be the model for more choice-based interactive content on Netflix.

How Bandersnatch works for Netflix

Netflix is in a different industry than Telltale Games was, but the more important difference here may be the business model.

Telltale Games made games for money. It needed people to buy its games and their sequels. If people liked and played the games, that was good -- maybe they'd buy the next one -- but the point for Telltale Games was to get those copies sold.

Netflix makes money on subscriptions. It maintains its subscription base by providing a decent service, of course, with plenty of content. And Netflix increases profits by making its own content and by getting people to watch it. The more hours people spend watching Netflix-made content, the less Netflix has to worry about competing with Hulu or HBO to get the streaming rights to some movie or TV series.

A big hit like Bird Box helps Netflix: When 45 million accounts watched Bird Box, that meant 45 million accounts were watching something Netflix had already paid for and would have the rights to forever.

Bandersnatch didn't beat Bird Box's record opening week in terms of accounts (at least, it presumably has not, since Netflix would almost certainly brag about that). But something else is happening: The people who watched Bandersnatch are rewatching it. Some superfans have watched the movie over and over to find multiple different scenes and endings. Fans are creating their own online guides to finding hidden content, and major outlets are producing content of the same nature, eager to get the clicks and views that Bandersnatch fans provide. All of this is beginning to feel like the obsessive culture that more commonly emerges around video games -- which, again, Bandersnatch at least sort of is.

Though we can't know for sure, it seems likely that Bandersnatch would not have sold very well as a game or a for-purchase movie. But Netflix's algorithms put it in front of a bunch of receptive fans at no extra cost, and people played it (the film also bears the branding of Black Mirror, a Netflix show with an established fan base, which surely helped). Unlike Telltale Games, Netflix didn't need to sell anything. It just needed people to play.

As Bandersnatch demonstrates, choice-based games could add a cost-saving new category of superfan to Netflix's user base.

Choosing the future

This isn't to say that Netflix will suddenly start making way more choice-based interactives, or replacing its live-action scenes with Telltale Games-like animations. But it's certainly possible that Netflix will take some limited steps in that direction.

Indeed, Netflix already has more choice-based projects planned. Not all of them would need to be Bandersnatch-level hits for Netflix to find big savings in the form of rewatchable (or replayable) content. It's too late for Telltale Games, but for choice-based gaming itself, there may be an undiscovered alternative ending lying in wait.

Check out the latest Netflix earnings call transcript.