People stay at the Netflix House experience center restaurant.
Andrej Sokolow | Image Alliance | fake images
netflix He was the first leader in streaming. He then moved on to another crucial piece of the media playbook: marketing and live events.
The streamer has recently begun adopting tried-and-true marketing methods that have been in play for companies like Walt Disney Co., Universal and Warner Bros. Discovery for decades: i.e. consumer product partnerships, special launch events, and destinations that drive fan engagement.
In January, the company closed its first master licensing deal with Jazwares, the maker of Squishmallows, to develop a line of products for “Stranger Things,” including figures, playsets, toy vehicles, costumes and plush toys. Jazwares has existing partnerships with brands such as Pokémon, Star Wars, Peppa Pig and Hello Kitty.
More recently, Netflix signed a landmark licensing deal with toy giants. Hasbro and Mattel develop toys and consumer products based on the smash hit “KPop Demon Hunters”.
And this month, the company opened Netflix House Philadelphia, a location in King of Prussia, Pennsylvania, offering immersive experiences, interactive games, live performances and themed dinners. A location of the concept is expected to open in Dallas in December, and another is expected in Las Vegas in 2027.
The entrance to the Netflix House experience center.
Andrej Sokolow | Image Alliance | fake images
The releases build on Netflix's strong slate of TV and film titles, which also includes “Bridgerton,” “Squid Game” and “Wednesday.”
“You need that intellectual property foundation to really build that consumer products strategy,” Marian Lee, Netflix's chief marketing officer, told CNBC. “That's the beauty of working in a place like Netflix, because we are constantly changing and looking for new opportunities.”
Netflix is relatively new to Hollywood. Only in the last decade has it been building 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 Wedbush analyst Alicia Reese. “They had to develop their content first and the fandom had to happen organically.”
That's one of the reasons why the company didn't launch a consumer products division until 2019 or an officially licensed online store until 2021.
Before that, the streaming giant had been working with consumer brands to create T-shirts, mugs, plushies and the like. It worked predominantly 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, those strategies helped Netflix reap the benefit of greater exposure. Now Netflix takes the reins.
“This is a big turning point for [Netflix] …the shift toward marketing efforts,” Reese said. “But also, I wouldn't limit it to marketing efforts. There are also games and games.”
In addition to deals with Epic Games' Fortnite, 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.
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 Regency-era finery 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 | fake images
There was also an immersive experience focused on “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 running in Abu Dhabi, United Arab Emirates, and will open in Mexico City next month. And a play called “Stranger Things: The First Shadow” runs in London's West End from 2023.
Netflix's live events and products strategy isn't just a way for the company to generate additional revenue outside of its streaming subscriptions. It helps keep fans interested in your content during show breaks and between movie sequels.
“KPop Demon Hunters,” for example, is not expected to have a follow-up movie until 2029.
“You know, 2029 is a long wait,” Reese said. “But having the merchandise, having pop-up stores or live events or some kind of fan engagement in the meantime will definitely help keep that engagement alive until they have the next content release.”
The 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 commercial space to give fans more connection points to the stories they love and keep them engaged with the brand between film and television releases.
Netflix is now taking this approach and has been deliberate about what kind of products and experiences it offers fans as it moves deeper into the segment.
“Bridgerton” merchandise includes tea sets, stylish pajamas, candles, beauty items and even select dog accessories, all featuring a delicate pastel color palette. The “Stranger Things” product line includes items like special Eggo waffles, Dungeons & Dragons sets, '80s-themed fashion items, and a bolder, darker color scheme.
“We think of it as an extension of the fandom, but also as an extension of the storytelling,” Netflix's Lee said of the company's marketing strategy. “A sticker book for 'KPop Demon Hunters' isn't 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 to get, that kind of low-cost commitment. So for us, in every IP and in every 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 following Comcast's planned spinoff of Versant.
Correction: Netflix House Philadelphia is in King of Prussia, Pennsylvania. An earlier version misstated the location.
