People linger in the restaurant of the Netflix House experience center.
Andrej Sokolow | Picture Alliance | Getty Images
Netflix was the early leader in streaming. It’s been later to another crucial piece of the media playbook — merchandising and live events.
The streamer has only recently begun adopting tried-and-true marketing methods that have been in play for the likes of the Walt Disney Company, Universal and Warner Bros. Discovery for decades: Namely, consumer product partnerships, special release events and venue destinations that drive fan engagement.
In January, the company struck its first master licensing deal with Jazwares, the maker of Squishmallows, to develop a product line for “Stranger Things,” including figures, play sets, toy vehicles, costumes and stuffed toys. Jazwares has existing partnerships with brands like Pokemon, Star Wars, Peppa Pig and Hello Kitty.
More recently, Netflix signed a landmark licensing deal with toy giants Hasbro and Mattel to develop toys and consumer products based off smash hit “KPop Demon Hunters.”
And this month, the company opened Netflix House in Philadelphia, a venue that features immersive experiences, interactive games, live performances and themed dining. A Dallas location of the concept is set to open in December, and another is expected in Las Vegas in 2027.
The entrance to the Netflix House experience center.
Andrej Sokolow | Picture Alliance | Getty Images
The launches play off Netflix’s robust slate of titles across television and film, which also includes “Bridgerton,” “Squid Game” and “Wednesday.”
“You need that foundation of IP to really build off to have that consumer product strategy,” Marian Lee, Netflix’s chief marketing officer, told CNBC. “It’s the beauty of working at a place like Netflix, because we are constantly pivoting and looking at new opportunities.”
Netflix is a relative newcomer in Hollywood. Only in the last decade has it been building out its library of original and proprietary content.
The streamer’s first original series release was 2012’s “Lilyhammer,” a Norwegian crime show about the misadventures of a mafia underboss living in the witness protection program. Its original programming really took off with 2013’s “House of Cards,” a political thriller about a ruthless congressman bent on revenge after being passed over for Secretary of State — the first series produced exclusively for the streaming service.
“They’re still a young company in the grand scheme of things,” said Alicia Reese, an analyst at Wedbush. “They had to build out their content first and fandom had to occur organically.”
That’s one of the reasons why the company didn’t launch a consumer products division until 2019 or an officially licensed online shop until 2021.
Before that, the streaming giant had been working with consumer brands to create T-shirts, mugs, plush toys and the like. It was predominantly working with licensees, collecting fees for other companies to design and make the products, or participating in brand partnerships where no fees were exchanged.
At the time, those strategies helped Netflix reap the benefit of more exposure. Now, Netflix is taking the reins.
“This is a great turning point for [Netflix] … the pivot into merchandising efforts,” Reese said. “But, also, I wouldn’t limit it to merchandising efforts. There is also games and gaming.”
In addition to deals with Epic Games’ “Fortnite,” in which players can purchase cosmetic items from “Stranger Things,” “Squid Game,” “Wednesday” and “KPop Demon Hunters,” Netflix also has a collection of mobile games based on its original content.
There’s also Netflix’s growing live entertainment business.
Since 2020, the company has launched more than 40 experiences in 300 cities. This includes “Bridgerton” events like The Queen’s Ball, which took place in nearly a dozen cities globally in 2022 and 2023 and invited guests to dress in their Regency-era finest for a themed party, as well as a concert series through Candlelight featuring music from the show.
Shonda Rhimes, Golda Rosheuvel and cast members visit The Queen’s Ball: A Bridgerton Experience in New York on April 30, 2023.
Ilya S. Savenok | Getty Images Entertainment | Getty Images
There was also an immersive experience centered on “Stranger Things” that allowed fans to explore Hawkins Lab and other iconic locations from the series in more than a dozen cities. It’s currently running in Abu Dhabi and will open in Mexico City next month. And, a play called “Stranger Things: The First Shadow” has been running in the West End in London since 2023.
Netflix’s merchandise and live events strategy is not just a way for the company to generate additional revenue outside of its streaming subscriptions. It helps keep fans engaged with its content during show hiatuses and in between movie sequels.
“KPop Demon Hunters,” for example, isn’t expected to have a follow-up film until 2029.
“You know, 2029 that’s a long wait,” Reese said. “But, having the merchandise, having pop-up shops or live events or some sort of fan engagement in the interim will definitely help to keep that engagement alive until they have the next content release.”
The strategy has been part of Disney’s playbook for decades. The company has used its IP as an anchor in its theme parks, cruise lines and resort locations as well as in the retail space to give fans more points of connection for the stories they love and keep them engaged with the brand in between film and television releases.
Netflix is now adopting this method and has been deliberate in what kinds of products and experiences it delivers to fans as it dives further into the segment.
“Bridgerton” merchandise includes tea sets, elegant pajamas, candles, beauty supplies and even curated dog accessories, all with a delicate, pastel color palate. The “Stranger Things” product line includes items like specialty Eggo waffles, Dungeons & Dragons sets, ’80s-themed fashion items and a bolder, darker color scheme.
“We think about it both as an extension of the fandom, but also as an extension of the storytelling,” Netflix’s Lee said of the company’s merchandising strategy. “A sticker book for ‘KPop Demon Hunters’ is not going to be a revenue driver for us, but if you’re a kid that loves that… a sticker book might be the perfect thing you pick up, that sort of low-dollar commitment. So, for us, across every IP and across every category, we are balancing a commercial opportunity that we think will drive revenue and also things that bring fans joy.”
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC upon Comcast’s planned spinoff of Versant.
