Netflix takes page out of Disney retail playbook

Netflix takes page out of Disney retail playbook

Netflix is moving into retail.

The streaming giant is planning to launch a number of brick and mortar stores — dubbed ‘Netflix Houses’ — in 2025, beginning in the US market before expanding globally.

The retail spaces are set to offer in-person experiences featuring Netflix’s most popular IP, as well as a place to sell merchandise and food.

Analysis: affirmation of the value of physicality

Netflix’s foray into retail comes after spending the better part of the past two years testing experiential productions and pop-up stores in the US and UK.

The company has leant into the post-pandemic demand for in-person experiences, and by offering new stores, they can do so while also generating additional revenue off the back of its most popular intellectual property, such as Stranger Things and Squid Game.

It is something of a page out of Disney’s playbook. Disney’s parks are a core and stable part of its business, and Netflix doubtlessly wants to recreate a miniature part of that magic, tapping into the flywheel effect that keeps the mouse chugging along. Netflix’s most popular IP can thus not only drive subscriptions, but also paid-for live experiences, merchandise sales, and food and drink sales through a retail experience.

Whether Netflix is seeking to purchase their own properties or pay a lease is an open question at this point, but depending on where the company aims to set up shop, there could be an opportunity to create additional value by expanding the company’s real estate footprint. Many retail spaces, such as shopping centres, are still yet to recover from the Covid-19 pandemic, and Netflix may be able to buy low on some properties.

Still, it’s a risk for a company that makes most of its revenue online. Similar projects by the likes of Amazon have yet to pan out, though other Big Tech players like Apple use their storefronts as a marketing tool as well as a customer touchpoint.

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