Netflix’s Merchandising Play

Estimated reading time: 3 minutes

Beyond Streaming

The world’s largest streaming platform, Netflix (NFLX), is once again looking beyond streaming for profits. Its latest focus: fan experiences and merchandising.

The one-time DVD rental service is no stranger to pivoting. Netflix initially built its streaming platform primarily by licensing other studios’ content. But now the company owns a large library of popular and acclaimed original content — and it’s looking to put it to work.

Pop-Ups & Merch Drops

Much like its competitor Disney (DIS), Netflix knows that, in order to reach peak popularity, content shouldn’t exist solely on viewers’ screens. While it may not have a theme park in the making, Netflix has recently invested heavily in fan experiences for its popular properties, such as a VR Squid Game.

Meanwhile, there’s another factor in the equation: merchandise. While Netflix is no stranger to making merch, in the past it waited until a show became a hit to roll out a merch run. Now the streaming giant is greenlighting merchandising efforts much earlier. In fact, merchandise inspired by the streamer’s new live-action anime adaptation One Piece is already available at retailers from Walmart (WMT) to Zara.

From Pixels to Products

Netflix’s new strategy may be implicitly cosigned by one of the biggest entertainment companies in the world, but not without its risks.

First, the streamer will need to commit to merchandising efforts further in advance, before it knows for sure whether or not a show will be a hit. In the case of One Piece, the company started planning and developing its merch 18 months in advance. Now, if the show flops, Netflix might lose money on the production of physical merchandise, not just content.

On top of that, Netflix will have to be more upfront about its content pipelines and viewership stats, which it has traditionally kept under wraps. Still, engagement and revenue stand to benefit exponentially, if Netflix can master the merch drop.

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