When Netflix (NFLX 1.74%) announced financial results last month, like always, the market fixated on one data point: subscriber growth of 4.4 million. This metric is clearly a key driver of success for the streaming juggernaut as more customers lead to more revenue. 

But co-founder and co-CEO Reed Hastings pointed something out on the third-quarter earnings call that pulls the curtain back on how he and his leadership team are thinking about the company's future. It's a page out of a competitor's playbook, which is wonderful news for Netflix shareholders. 

A person sitting on a couch, eating popcorn, and watching streaming TV.

Image source: Getty Images.

Copying the House of Mouse 

Providing consumers with an all-around experience centered around content, merchandise, and experiences, a strategy that has made Walt Disney (DIS 1.09%) so successful, is what Netflix could ultimately become. "A company like Disney is still ahead of us in some of those dimensions of putting that whole experience together, but boy, are we making progress," Hastings said on the conference call with analysts. 

He specifically called out Squid Game as an example of what could happen when a show has a huge cultural impact globally. The monster hit series has been watched by 142 million member households and is Netflix's most popular show of all time.

"Imagine three years from now and some future Squid Game is launching, and it comes along with an incredible array of interactive or gaming options, and it's all built into the service," he added. "When everyone can't stop talking about your content, you've built something really special that then creates new revenue possibilities based on member interest." 

Hastings followed up his comments by saying that Netflix hopes to pass Disney "on that spectacular all-around experience." What this eventually looks like is anyone's guess, but it does bode well for shareholders. 

The biggest concern on investors' minds right now is the slowdown in subscriber additions, particularly in the U.S. and Canada. Also, they wonder how management will be able to drive top-line growth in the years ahead. Aiming to develop consumer experiences like what Disney has done introduces a ton of optionality for Netflix. And at the end of the day, it's all about delivering more value for customers and coming up with new ways for them to interact with the Netflix brand. 

Monetizing intellectual property 

Since Netflix first dipped its toe into the content-development waters with the release of House of Cards in 2013, the business has developed a massive library of valuable intellectual property that it can monetize in a number of different ways. After completing the already-difficult test of creating compelling stories and characters that fans love, Netflix can add incremental revenue by doing things like selling merchandise and developing games (areas the company is already focusing on). 

There are other possibilities, too. There could be full-on Stranger Things or Black Mirror experiences at amusement parks, for example. There are already Squid Game-themed games and experiences taking place on the Roblox platform as a direct result of the popularity of the show. In the third-quarter earnings call, for example, Netflix COO Greg Peters made it clear that the company appreciates the word-of-mouth promotion that follows from fan-made experiences:

"People are sending around TikTok videos or they're doing their own sort of mini-games in Roblox or things like that," Peters said. "I think that's great. And I think that we should celebrate that fandom and that excitement as well."

These actions will strengthen consumers' connections with their favorite stories and characters, which drive higher levels of engagement and lower churn. In fiscal 2019 (pre-pandemic), Disney generated $26.2 billion, or 37.6% of the total, from its Parks, Experiences, and Products segment, making it the company's largest revenue source. I'm not saying that a similar proportion of Netflix's business will ever come from non-streaming activities, but you get a sense of the potential long-term opportunity. 

Netflix is now a major force in Hollywood. With its top-notch competency, skill, and most importantly, cultural impact, it is given a rare and valuable chance to figure out more ways to grow sales. Investors will certainly appreciate the prospect of a more diversified business.