Here’s a Netflix executive’s reassuring confidence in a new strategy

netflix (NFLX 1.90%) is making a big shift in strategy to focus more on fun, viral games that can complement its series. In this Motley Fool Live excerpt from “The Gaming Show”, recorded on April 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.

Jon Quast: Let me read here something from the earnings call transcript that I found very interesting specifically in the context of explosive kittens and so here’s what, who said this here, Gregory Peters, he’s the chief of product at Netflix. He says it’s kind of a first step on a long roadmap that we’ve got around thinking about how we do serial film and then interactive games kind of experience the interaction between those- these amplify the value our members get from both . So kind of, you know, I don’t know all about what exactly that means in real life, but I know what they’re saying there’s going to be basically the adult, it’s going to be for adults, the series lively. I believe the producer behind it is Mike Judge, who if, you know, Mike Judge, king of the hill, that gives you a bit of an idea, but the mobile game that they’re making is gonna have some links to the animated series. So it’s kind of interesting to think about it that way. I guess if you watch the series maybe that’s where the added value comes in or maybe the most appreciation or maybe you actually need information about the series to play the game effectively game. I’m not sure exactly what that means, but it would be interesting to watch.

Jose Najarro: I also mean, one thing that I think is super strong with Netflix is ​​that they’re able to see which of their types of programs have high engagement. I think we talked about it here with Ryan, where it’s very expensive to make a game and expect it to work well. But now, if you already have that kind of solid IP address, it can kind of drive it, which can kind of increase the odds of this game succeeding somewhat. Well, another thing I wanted to mention is that a lot of people are kind of, hey, how does this game increase the overall revenue of the company? As I mentioned, I think they made $120 million or $150 million in cash acquisitions this quarter. I forget the actual number but just to kind of put it and it’s kind of grabbing a whole game studio studio and putting this into perspective there are reports online right now where the news series Stranger Things, season 4, each episode costs around 30 million dollars. Nobody’s talking, hey, how will stranger things somehow bring? It’s more simply about increasing the set of products they bring to make sure you don’t override. Like we kind of saw this quarter or we expect to see the upcoming quarter.

Ryan Henderson: To follow up I actually like the strategy and they just said gaming content spend would replace some of the linear content spend because they said they were going to make sure they hit their operating metrics or profitability. So it’s going to be basically, I’d think of a one-for-one swap and the name of the game adds subscribers for Netflix at the end of the day. I think part of what Netflix has been so successful with is they make the shows go viral and that usually almost leads to this FOMO where everyone’s like, okay, I’m going to go watch this. Which one was, it was a series that was super popular.

Jose Najarro: Squid games.

Ryan Henderson: Squid Games, and it attracts a lot of subscribers. I think they can do it with games. I think they can, especially if they’re able to like that mix of content, where it’s like you’re watching the video, OK, a whole bunch of people are now playing Exploding Kittens too. You also think about how that relates to this potential ad-supported level that they talked about, where it’s now more accessible to play this mobile game, if there’s some sort of ad-supported mobile experience maybe less expensive. I think, I think that fits in nicely, I guess we’ll see how that plays out, but Netflix is ​​obviously making a big change now in their strategy and I think we’ve seen a lot of those comments during the quarterly conference call, and I think viral-like easy and fun mobile games will be kind of a staple of that strategy.

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