Some of my thoughts on the media & entertainment business world….if you were forwarded this email and want to receive regular updates, click here:
Netflix.Shop, What.Next?
Netflix just launched its merch shop where you can buy clothes and accessories inspired by shows like Lupin, Stranger Things and The Witcher. Netflix has been toying (hah) with this idea since 2017 and hired back to back Disney alumni (Christie Fleischer and Josh Simon) to build the team. Netflix partnered with retailers like Sephora and Target before, but this is the first time the mega-streamer is selling branded content itself.
The simple story is that this is the next step for Netflix to build a media empire a la Disney. It’s an easy narrative to grab, just look at some of the headlines:
Netflix Opens an Online Shop, Taking a Page from Disney (Dot.LA)
How Netflix's new online store could help it take on Disney (Fast Company)
How Netflix's New Shop Feature Takes Aim at Disney Merchandise (IndieWire)
Netflix pulls a Disney (Robinhood)
OK….but to be clear, there is much more to “pulling a Disney” than launching a store and I don’t think Netflix.Shop is the grand plan.
First, Netflix is VERY far away from battling the Mouse in the pure consumer products game, and not just because it’s new. Disney has built an incredibly strategic moat around its merchandising and licensing that Netflix won’t crack by slinging backpacks and sweaters for 50 years. Second, and more importantly, I think Netflix.Shop is a first step towards testing in-video commerce to boost user engagement. The ancillary merch revenue is just that, ancillary.
1) Netflix has a lot to learn from King Mickey: For almost 100 years, Disney has been focused on creating characters and franchises. On top of this, Disney built multiple channels to help you fall in love with that IP and influence purchase behavior in deep, broad ways. In my Disney “flywheel of synergy” below, every part of The Walt Disney Company fosters consumer love. Characters like Mickey Mouse or Woody can be refreshed and reintroduced to audiences time and time again via various mediums. I’ve said it before, Disney is the best at developing consumer love and that drives generational demand. Mickey and Woody empower Disney to lead with stories and follow with experiences and products. The reverse is just advertising.
Netflix is billions of investment dollars away from creating a similar flywheel of synergy. “Pulling a Disney” is a long way away.
2) What.Next: So if a Lupin coffee table isn’t the growth story, what is? I think Netflix will eventually launch in-video commerce as we cozy up to Netflix branded merchandise. Maybe you’re watching Season 3 of The Witcher and Geralt finds a rare, mythical pendant. You “swipe up” with your phone and there’s an option to buy that pendant for $95. (Maybe other pendants are scattered throughout the season and become collectibles like fancy Disney pins.) High-end items like the pendant or a $200 Queen’s Gambit chess set offer a low-risk, high margin business while adding new ways for consumers to engage with content. This isn’t disruptive like an ad and the experience slowly gets viewers comfortable with in-video commerce. Netflix can test many in-video experiences to see what delights us in a native way, particularly if they roll out more interactive stories.
“We love it when great stories transcend screens and become part of people’s lives” - Netflix.Shop press release
^ I bet they love it even more when these shoppable stories keep you in the Netflix app for 30 min longer!
Other Highlights
M&A
OverDrive to acquire Kanopy, a video streaming service for public and academic libraries. Have a public library card? Now you can access 30,000 films via Kanopy including Moonlight, Parasite and Another Round
Netflix
Netflix inks multi-film, multi-year deal with Spielberg’s production studio, Amblin Partners. Big move for Daddy Sarandos to flex Spielberg’s name on Netflix titles
Sinclair+?
Sinclair Broadcast Group looking to raise $250mm to launch sports streaming service. Sinclair owns 21 regional sports networks that cover 14 MLB teams, 16 NBA teams and 12 NHL teams (Sinclair picked these up in a $9.6 billion deal from Disney back in 2019). Cheers to another blow to the cable package
Walt’s Thoughts
On the heels of launching its online retail shop, Netflix released the trailer to its new horror series, Sexy Beasts. Inspired by the collective nightmares of some disturbed writers, the show's premise is to dress contestants up in elaborate costumes and set them up on blind dates to test whether or not personality is all it takes to fall in love.
Admittedly, I didn't see the appeal of The Masked Singer when it first debuted, but now find myself occasionally tuning in. However, when it comes to strangers going to dinner dressed as Floop's Fooglies, no force on earth could possess me to sit through that half-hour of secondhand embarrassment.
My prediction is two uneventful seasons (only because they’ve already filmed) that quickly fall into obscurity, with an abundance of amusing memes along the way. It arrives on Netflix July 21st. You've been warned.
"Let's dress up like the Chuck E. Cheese band and go bowling, so I can get to know the real you." -No One Ever
What I’m Streaming…
Sharp Objects: Dark, grisly and another win for the HBO crime/thriller/wild twist miniseries bucket. Yes, I know I’m late to this one.
Mulan: It started with me watching the 2020 live action remake last weekend. It was not good. I missed the humor, songs and Mushu from the 1998 animation. I felt so robbed I re-watched the original the next day.