People linger in the restaurant at the Netflix House experience center.
Andrej Sokolow | Alliance in pictures | Getty Images
Netflix was the first leader in streaming. We then moved on to another crucial part of the media playbook: merchandising and live events.
The streamer has only recently started adopting proven marketing methods that have been used by companies like Walt Disney Co., Universal And Discovery of Warner Bros. for decades: namely consumer product partnerships, special events and venue destinations that drive fan engagement.
In January, the company entered into its first master licensing agreement with Jazwares, the maker of Squishmallows, to develop a line of products for “Stranger Things,” including action figures, playsets, toy vehicles, costumes and plush toys. Jazwares has existing partnerships with brands like Pokemon, Star Wars, Peppa Pig and Hello Kitty.
More recently, Netflix signed a historic licensing agreement with toy giants. Hasbro And Mattel to develop toys and consumer products based on the hit “KPop Demon Hunters”.
And this month, the company opened Netflix House Philadelphia, a venue in King of Prussia, Pennsylvania, that offers immersive experiences, interactive games, live shows and themed dining. A location of the concept in Dallas is expected to open in December and another is expected in Las Vegas in 2027.
The entrance to the Netflix House experience center.
Andrej Sokolow | Alliance in pictures | Getty Images
The launches build on Netflix’s strong lineup of titles in television and cinema, which also includes “Bridgerton,” “Squid Game” and “Wednesday.”
“You need that intellectual property foundation to really build that consumer products strategy,” Netflix chief marketing officer Marian Lee told CNBC. “That’s the beauty of working at a place like Netflix because we’re constantly adapting and looking for new opportunities.”
Netflix is a newcomer to Hollywood. Only in the last decade has it expanded its library with original and exclusive content.
The streamer’s first original series 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.
“It’s still a young company overall,” said Alicia Reese, an analyst at Wedbush. “They had to grow their content first and the fandom had to happen organically.”
This is one of the reasons why the company didn’t launch a consumer products division until 2019 nor an officially licensed online store until 2021.
Before that, the streaming giant worked with consumer brands to create T-shirts, mugs, plush toys, and more. This mainly involved working with licensees, collecting fees for other companies to design and manufacture the products, or participating in brand partnerships where no fees were exchanged.
At the time, these strategies allowed Netflix to benefit from greater visibility. Now, Netflix is taking the reins.
“This is a big turning point for [Netflix] …the backbone of merchandising efforts,” Reese said. “But, also, I wouldn’t limit myself to merchandising efforts. There are 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 offers 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 around the world in 2022 and 2023 and invited guests to dress in their finest Regency-era attire for a themed evening, as well as a series of candlelight concerts featuring music from the show.
Shonda Rhimes, Golda Rosheuvel and cast 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 around “Stranger Things” that allowed fans to explore Hawkins Lab and other iconic locations from the series in more than a dozen cities. It is currently underway in Abu Dhabi, United Arab Emirates, and will open in Mexico City next month. And a play called “Stranger Things: The First Shadow” has been running in London’s West End since 2023.
Netflix’s merchandise and live events strategy isn’t just a way for the company to generate additional revenue outside of its streaming subscriptions. It helps fans stay engaged with its content during show breaks and between movie sequels.
“KPop Demon Hunters,” for example, is not expected to have a follow-up film until 2029.
“You know, 2029 is a long wait,” Reese said. “But having merchandise, hosting pop-up shops, live events or some sort of fan engagement in the meantime will definitely help keep that engagement alive until the next content release.”
This strategy has been part of the Disney playbook for decades. The company has used its intellectual property as an anchor across its theme parks, cruise lines and resorts as well as the retail space to give fans more connection points for the stories they love and keep them engaged with the brand between film and television releases.
Netflix is now adopting this method and has been thinking about the types of products and experiences it offers fans as it deepens its segment.
“Bridgerton” products include tea sets, stylish pajamas, candles, beauty products and even dog accessories, all in a delicate pastel color palette. The “Stranger Things” product line includes items such as specialty Eggo waffles, Dungeons & Dragons sets, 80s-themed fashion items and a bolder, darker color palette.
“We think of it as both an extension of fandom, but also an extension of storytelling,” Netflix’s Lee said of the company’s business strategy. “A sticker book for ‘KPop Demon Hunters’ is not going to be a revenue generator for us, but if you’re a kid who loves it… a sticker book might be the perfect thing that you choose, that kind of low-cost engagement. So for us, on each IP and in each category, we’re balancing a business opportunity that we think will generate revenue and also things that will bring joy to fans.”
Disclosure: Comcast is the parent company of NBCUniversal, which owns CNBC. Versant would become the new parent company of CNBC in Comcast’s planned spinoff of Versant.
Correction: Netflix House Philadelphia is located in King of Prussia, Pennsylvania. An earlier version incorrectly stated the location.