As Netflix continues its steady march toward 100 million global paid subscribers, there could be another major revenue stream that the massively popular streaming service has not yet fully unlocked.
Netflix is now delivering movies and TV shows on-demand to more than 190 countries around the world, including more and more of its own original content. That’s a potentially huge, and growing, fan base for a wide range of intellectual property to which Netflix owns licensing rights. The company has already dabbled with licensing merchandise based on some of its most popular shows, and now one analyst thinks Netflix could have a billion-dollar merchandising business on its hands.
RBC analyst Mark Mahaney wrote recently that Netflix could pull in $1 billion a year from sales of merchandise bearing the names and intellectual property from the company’s most popular programs, such as the sci-fi series Stranger Things or the award-winning historical drama The Crown.
“We view this as a highly reasonable step by Netflix to further promote and market its original content and other offerings,” Mahaney wrote in a note to clients about the potential in merchandising for Netflix, as reported by Business Insider.
By adding a merchandising arm, Netflix would be following the lucrative example of media giants like Walt Disney, which pulls in billions of dollars each year from popular franchises such as Star Wars and hit animated films like Frozen. Last year, Netflix tried its hand at merchandising by teaming up with retailer Hot Topic on a line of Stranger Things merchandise, including apparel and other branded products. But the streaming company seems to be poised to take an even bigger plunge into the realm of licensed merchandise.
In February, Bloomberg reported on a job posting on Netflix’s website seeking a director to oversee licensing and merchandising operations at the company. “We want licensed merchandise to help promote our titles so they become part of the zeitgeist for longer periods of time,” the posting read.
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Assuming that Netflix does, in fact, continue down this path, the company could tap into the success and popularity of some of the original brands it owns in order to generate an additional revenue stream. That would mean even more money for Netflix to help offset the huge cost of producing its own content.
Netflix has already said the company plans to spend more than $6 billion to produce more than 1,000 hours of original content in 2017, which is roughly $1 billion more than the company spent on its own productions last year.
