Netflix leans into merchandising with toy deals and event spaces

netflix was the first leader in the flow. Then it was time to move on to another important part of the media playbook: sales and live events.

The publisher has recently begun adopting the tried-and-true marketing methods that apply to its peers. Walt Disney Company, Universal And Warner Bros. Discovery for decades: namely consumer product partnerships, special broadcast events, and venue destinations that increase fan engagement.

For the first time in January, the company master license agreement He teamed up with Jazwares, the maker of Squishmallows, to develop a line of figures, playsets, toy vehicles, costumes and stuffed toys for “Stranger Things.” Jazwares has existing partnerships with brands such as Pokemon, Star Wars, Peppa Pig and Hello Kitty.

Netflix recently signed a major licensing deal with toy giants hasbro And Mattel developing toys and consumer products based on the smash hit “KPop Demon Hunters.”

This month, the company opened Netflix House in Philadelphia, offering immersive experiences, interactive games, live performances and themed meals. The concept’s Dallas location is scheduled to open in December, and another location is expected to open in Las Vegas in 2027.

The launches complement Netflix’s strong slate of television and feature films, including “Bridgerton,” “Squid Game” and “Wednesday.”

“You need the intellectual property foundation to really develop this consumer product strategy,” Netflix chief marketing officer Marian Lee told CNBC. “That’s the beauty of working at a place like Netflix because we’re always changing and looking at new opportunities.”

Netflix is ​​a relatively new player in Hollywood. It is only in the last decade that it has created its library of original and exclusive content.

The streamer’s first original series was 2012’s “Lilyhammer,” a Norwegian crime show about the misadventures of a mob boss living in a witness protection program. His original show really took off in 2013 with “House of Cards,” a political thriller about a ruthless congressman seeking revenge after being ousted as secretary of state; this series was the first series produced exclusively for the streaming service.

“It’s still a young company in the grand scheme of things,” said Wedbush analyst Alicia Reese. “They had to create their content first, and the fandom had to build organically.”

This is one of the reasons why the company has not made a launch. consumer products division Until 2019 or officially licensed online store Until 2021.

Before that, the streaming giant had worked with consumer brands to produce T-shirts, mugs, plush toys and the like. It was mainly working with licensees, collecting fees from other companies to design and make products, or participating in brand partnerships where no fees were charged or given.

At the time, these strategies helped Netflix take advantage of more exposure. Now Netflix is ​​taking the reins.

“This is a big turning point for us. [Netflix] … the gateway to sales efforts,” Reese said. “But at the same time, I’m not going to limit it to sales efforts. There are also games and games.”

In addition to Epic Games’ Fortnite deals, where 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.

Netflix also has a growing live entertainment business.

The company has launched more than 40 experiences in 300 cities since 2020. This includes “Bridgerton” events like The Queen’s Ball, which takes place in nearly a dozen cities around the world in 2022 and 2023 and invites guests to dress in their Regency-era finest for a themed party, as well as a Candlelight concert series featuring music from the show.

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 currently operates in Abu Dhabi, United Arab Emirates, and will open in Mexico City next month. And a game called “Stranger Things: First Shadow” It has been running in London’s West End since 2023.

Netflix’s product and live event strategy isn’t just a way for the company to generate additional revenue outside of streaming subscriptions. It helps keep fans engaged with content during breaks between shows and sequels.

For example, “KPop Demon Hunters” is not expected to have a feature sequel Until 2029.

“You know, 2029 is a long wait,” Reese said. he said. “But having merch, having pop-up shops or live events, or some kind of fan interaction along the way will definitely help keep that engagement alive until the next piece of content is released.”

This strategy has been part of Disney’s playbook for decades. The company has used its intellectual property as a foothold across theme parks, cruise lines and resorts, as well as retail, to give fans more points of connection to the stories they love and keep them engaged with the brand between movies and television broadcasts.

Netflix is ​​now embracing this method and being intentional about what kind of products and experiences it will offer fans as it moves forward in this segment.

“Bridgerton” products include tea sets, elegant pajamas, candles, beauty supplies and even elaborate dog accessories; all in delicate, pastel hues. The “Stranger Things” product line includes products like custom Eggo waffles, Dungeons & Dragons sets, ’80s-themed fashion and a bolder, darker color scheme.

“We think of it as both an extension of fandom and an extension of storytelling,” Netflix’s Lee said of the company’s sales strategy. “A sticker book for ‘KPop Demon Hunters’ isn’t going to be a revenue stream for us, but if you’re a kid who loves it… a sticker book might be the perfect thing to get, that kind of low-dollar commitment. So for us, with every IP and every category, we’re balancing a commercial opportunity that we think will drive revenue, but also things that will bring joy to fans.”

Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become CNBC’s new parent company, based on Comcast’s planned Versant spinoff.