Netflix (NFLX -0.98%) is making a big shift in strategy to place more focus on fun, viral games that can complement its series. In this Motley Fool Live segment from "The Gaming Show," recorded on April 25, Fool.com contributors Jon Quast, Jose Najarro, and Ryan Henderson discuss recent comments from Netflix's chief product officer about adding interactive games to its content library.
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Jon Quast: Let me just read something here from the earnings call transcript that I thought was very interesting specifically in the context of the Exploding Kittens and so here's what, who said this here, Gregory Peters, he's the Chief Product Officer at Netflix. He says, it's sort of an initial step on a long road map we have around thinking about how do we make the film in series side and then the interactive games experience sort of the interplay between those magnify the value that our members are getting from both. So it kind of, you know, I don't know everything about what that exactly means in real life, but I know what they're saying that there's going to be essentially the adult, it's going to be for adults, the animated series. I believe that the producer behind it is Mike Judge, which if, you know, Mike Judge, the King of the Hill, so it kind of gives you a little bit of an idea, but the mobile game that they're creating, it's going to have some tie ins with the animated series. So it's kind of interesting to think about it that way. I would assume that if you are watching the series, perhaps that's where the added value comes in or maybe the greater appreciation or maybe you actually do need information from the series to play the game effectively. I don't know exactly what this means, but it would be interesting to watch.
Jose Najarro: I also want to say, one thing that I think is super strong with Netflix is they're able to see which of their kind of programs have great engagement. I think we've talked about it here with Ryan where it's super expensive to kind of build a game and then to hope it does well. But now, if you already have this kind of strong IP behind it it can kind of drive it can kind of increase the chances of that game kind of doing somewhat. Well, another thing I wanted to mention is a lot of people are kind of, hey, how is this gaming kind of increase the overall revenue for the company? Like I mentioned, I think they did $120 or $150 million in cash acquisitions this quarter. I forget the actual number, but just to kind of put it in and that's the kind of grabbing a whole studio of gaming studio and to kind of put that in perspective, there are reports online right now where the new Stranger Things series, season 4, every episode is costing about $30 million. No one's talking hey how is the stranger things going to kind of bring? It's more just increasing the overall products that they bring to kind of make sure you're not subbing out. Like we kind of saw this quarter or are expected to see the upcoming quarter.
Ryan Henderson: To tag along there, I actually like the strategy and they basically just said the gaming content spend will replace some of the linear content spend because they said they're going to make sure to hit their operating or their profitability metrics. So it's going to basically be, I would think of one for one swap and the name of the game is adding subscribers for Netflix at the end of the day. I think part of what Netflix has had a lot of success doing is they get the shows go viral and that usually drives almost this FOMO where everyone's like, all right, I'm going to go watch that. What was the one that was, it was a series that was super popular.
Jose Najarro: Squid Games.
Ryan Henderson: Squid Games, and that brings in a lot of subscribers. I think they can do that with gaming. I think they can, especially if they're able to kind of like this blend content together, where it's like you're watching the video, OK, a whole bunch of people are now playing Exploding Kittens as well. You also think about how that ties into this potential ad supported tier that they've talked about, where it's now more accessible to play that mobile game, if there's sort of this maybe lower cost, ad supported mobile experience. I think, I think it ties in well, I guess we'll see how it plays out, but Netflix is obviously making a big shift now in their strategy and I think we saw a lot of that commentary on the quarterly conference call, and I think easy sort of fun viral type mobile games are going to be sort of a staple in that strategy.