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What Should a Netflix Store Experience Be?
Borrowing from Disney’s playbook, Netflix plans to open permanent physical locations, named Netflix House, with merchandise, food, and activities inspired by its TV shows and movie content.
The first two locations won’t open until 2025 in the U.S., but global expansion across major cities is planned afterward, according to a Bloomberg report.
“We’ve seen how much fans love to immerse themselves in the world of our movies and TV shows, and we’ve been thinking a lot about how we take that to the next level,” Josh Simon, Netflix’s VP of consumer products, told Bloomberg.
The physical spaces are viewed as a way for Netflix to promote new shows and movies rather than generate revenue, according to the report. Disney and other studios have used merchandise sales, whether toys, clothing, accessories, or collectibles, to supplement or drive the profitability of its franchises, particularly for movie blockbusters.
According to License Global magazine’s Top 10 Global Licensors list for 2023, The Walt Disney Company, which owns the Disney, Pixar, Marvel, and Star Wars franchises, is by far the top licensor in the world with $61.7 billion in retail sales of licensed merchandise worldwide. Warner Bros. Discovery, whose properties include HBO, DC Comics, and Cartoon Network, raked in fourth place with $15.8 billion, and NBCUniversal/Universal Products & Experiences ranked seventh with $10.5 billion. The Pokémon Company International, Hasbro, and Mattel also made the top-10 list.
Netflix has been looking for more ways to monetize its platform, including adding an ad-supported subscription tier in November 2022. In early October, the Wall Street Journal reported that Netflix plans to raise subscription prices after the Hollywood strike ends.
Under Simon, who joined Netflix from Nike in 2020, the company has launched more than 40 pop-up locations to date, including ticketed experiences like “The Queen’s Ball: A Bridgerton Experience” and “Stranger Things: The Experience.” Its next immersive experience is “Squid Game: The Trials,” which opens in Los Angeles this December with tickets starting at $39 each and features six different challenges over the course of 70 minutes.
This past summer, a pop-up restaurant, Netflix Bites, opened in Los Angeles featuring creations from chefs from “Chef’s Table,” “Is It Cake?” and other foodie shows on the platform.
In traditional retail, Netflix temporarily opened a 10,000-square-foot store at the Grove in Los Angeles selling a wide range of Netflix fandom gear and featuring life-size photos of popular franchise characters. It also has a deal with Walmart for Netflix Hub in-store and online merchandise shops.
Netflix House will have rotating installments, including ticketed experiences and themed food and beverages from shows. Details were sparse on potential ticketed activities, with the Bloomberg article suggesting consumers could “maybe even try a Squid Game obstacle course.”
Discussion Questions
What do you think of the potential for a Netflix House physical experience embracing shopping, eating, and playing? What can Netflix learn from Disney and other media giants on tapping merchandising and licensing opportunities around content?
Poll
Loading …BrainTrust
Karen S. Herman
CEO and Disruptive Retail Specialist, Gustie Creative LLC
Joel Rubinson
President, Rubinson Partners, Inc.
Netflix stores need to be compelling and encompass a range of experiences. That means having a good foodservice offering. And it means having things to entertain whether that be watching content, games to play, or activities for kids and adults. And to differentiate, all of this needs to be themed to fit in with the great content Netflix produces. Think Squid Games contests, menu items from Virgin River’s Jack’s Bar, and so forth. Retail is another piece of the jigsaw with items and memorabilia from hit shows. What this can’t be is another also-ran bland store. Netflix has an opportunity to do something exciting here and I would like to see it push the limits.
The difference between Disney stores and Netflix stores should be obvious: themes. Netflix only theme is movies and popcorn and I don’t see the attraction. For that, I go to a movie theater.
Great point Bob, I would add Disney also has curated characters and branded experiences. Netflix as a long way to go to have that sort of appeal.
With Netflix and the other streamers intentionally not renewing popular shows and throwing out legacy IP in order to evade residuals payments and salary increases to actors and authors, this kind of physical investment seems counterproductive: get people excited for a show you’re about to not give a Season 3. A waste of money, that proves they do have the money to pay creative people for popular quality content.
Content drives commerce. Netflix House will fuse immersive entertainment with exclusive experiences to attract new fans and deepen loyalty.
Disney and U2’s Sphere concerts prove consumers will pay a premium for multisensory magic.
The intersection of commerce, entertainment, content, and merchandising is where all the action is at. This is why the LEGO Group, Marvel Entertainment, and The Walt Disney Company have been so successful with their merchandising strategies.
However, overexpansion and extending the company too thin is a cautionary tale. For now, there is a lot of hype cycle activity with this. Netflix should stay close to its core competencies of streaming quality content as the retail stores are only niche strategies.
The stores must provide a differentiated experience, and the assortments should be curated to closely accompany the featured streaming movies and content. It will be the exclusive “Available at Netflix Only” licensed merchandise that will make going to the store a memorable experience. Otherwise, a bland movie theater-like experience will fall flat and not meet expectations.
I agree with Brandon. While it seems somewhat compelling to replicate the experiential models of Disney, LEGO, and Marvel Entertainment, overextending is a risk for Netflix. I would stay close to what they do best.
I agree with this take. It’s interesting to see Netflix step into the “phygital” retail space, seamlessly blending physical and digital realms, and creating a unique and immersive shopping experience with the help of technologies like VR, AR and AI. However, consumer trust can easily be lost if the interactive experiences don’t meet their expectations. If they attend a Netflix House once and don’t enjoy it, it will be difficult to entice them to return.
I think this is a horrible idea. “Squid game obstacle course”???? Isn’t that a show where people get killed in a competition? Who in Netflix HQ cooked this up?
Beyond that, your ability to sell stuff based on various show is highly dependent on hit shows being produced, and created, and produced again and again and again. Nothing about this is right from my viewpoint.
I had to stop laughing at your comments before I could respond. My reaction too, but I tried to be diplomatic… 🙂 🙂 🙂
This is one of the best retail ideas I have read about in a long time, a very long time. Talk about experiential…!!! My mantra continues to be “Explore + Experiment + Execution = Experience³”. The customer wants to explore and experiment and execution by the retailer boils down to storytelling. It’s staggering to think of the storytelling opportunities that Netflix has available.
This article had me with the opening words. “Borrowing from Disney’s playbook…”. Disney is arguably the best storyteller ever, so if a brand or retailer is saying they intend to build on that premise, and have the content to pull it off, then my bag of popcorn is ready. This is going to be entertaining!
There will definitely be demand for these experiences, as so many restaurants and bars have tried to do their own pop-up Netflix events. I’ll be curious to see what all they put into them.
Netflix is tapping into today’s consumer and their desire for short-term physical environments to explore and experience their favorite digital content. Netflix will succeed if the goal is to elevate brand interactions through creative engagement with new shows, movies and exclusive content. Netflix will enhance customer affinity and be the disruptor who introduces a new creative format. Look no further than AMC’s promotion of Taylor Swift: The Eras Tour movie. Simply brilliant.
The Netflix House brings “retail as theater” to a whole new level. They have learned from Disney and all the other top licensing powerhouses and have road-tested these as pop-ups as well. If you can raise subscription prices and charge $39 for an “experience” on top of that, at scale, you should do fairly well!
I would put a vending machine in that dispenses the red envelope DVDs of past and present Netflix shows. A popcorn machine, for sure. A mini theater room that you rent for private parties. A room with immersive video projection like the traveling Van Gogh exhibit that could probably offer specific movies and shows basically on demand. (I now assume that with AI working behind the scenes, anything is possible.) The list is probably endless with ways to leverage licensing of all things Netflix. Best of all: no stockouts!
While I do think retail and experiential events go hand in hand, I’d rather see Netflix stick to the content side that its business model was built around rather. Companies have proven time and again that they struggle when they reach too far into areas where they have little expertise. Amazon, Comcast and others have suffered big losses from failed brick and mortar attempts, and still haven’t figured out how to make stores work for them. I’d much rather see Netflix partner with a proven retailer to set up physical spaces, that way Netflix can focus on what they do most profitably and let their partners do the same for their brick and mortar presence. Investors and shareholders are impatient and won’t want to give Netflix the considerable amount of time it will take to revise their internal structure to make a physical component successful.
Imagine the kids’ excitement as you tell them they’re going to the Netflix store on Saturday! Loser concept.
Shopping for show-inspired goodies, munching on themed snacks, and even playing in a Squid Game obstacle course, it’s a clever move by Netflix. It’s not just a store; it’s a whole experience, making the whole entertainment experience interactive & exciting. This is a smart step by Netflix to connect with the audience on a whole new level.
While Netflix House sounds exciting, it could face challenges. First, it might not generate substantial revenue, considering it’s more about promotion than profit. Second, global expansion could be tricky; different cultures might not embrace it universally.
Netflix can learn from Disney’s merchandising success by creating iconic characters and leveraging them for diverse products. Building a brand beyond screens and embracing licensing opportunities enhances audience connection and revenue streams.
Maybe they should rent their movies! (JUST KIDDING) Seriously, Netflix has become part of our culture. How many people do you know who don’t know about Netflix? How many don’t have an account (or are related to someone who lets them use their account)? This makes sense. Netflix can position licensed merchandise in alignment with popular shows and movies. This is similar to Disney selling its own products in the Disney store. I like it and look forward to buying some fun memorabilia.
I’d say they need to emphasize their original content. There is an HBO store on the street level of the HBO building where I bought a dragon egg for my wife who loved Game of Thrones. The streaming wars are really a battle about the original content.
Other than “yet another restaurant” (now there’s a simple easy business to get into….) what exactly are they selling, and who’s buying it?
Special limited-time events like “Halloween nights” at Universal, Disney, and Knott’s sell out in Los Angeles, so there’s room for more
I attended the drive-thru “Strangers Things” experience in Los Angeles and the enthusiastic attendance of the event, coupled with the popularity of multi-genre entertainment events (such as Comic Con or Anime Expo), leads me to believe there is great potential for a physical experience — I’m looking forward to attending the Squid Games The Trials Experience this fall.
While I think the merchandising and licensing learnings from the big parks are critical, Netflix needs to focus on more dynamic, interactive, and limited-time models like Halloween nights, saferooms, obstacle course races, and other interactive entertainment and immersive models.
Interesting idea. I see several challenges. First, while the primary purpose is promotion, it’s essential to ensure that the stores are profitable or at least break-even to justify the investment, Then there is the content. The success of these stores will heavily rely on the popularity of Netflix’s shows and movies. A dip in content quality or viewership can impact the store’s appeal. Finally, cultural differences can pose challenges when expanding globally. What works in one country might not resonate in another.
While the concept of a Netflix House is promising and can offer fans a unique experience, its success will depend on execution, content quality, and adaptability to different markets. It’s a bold move by Netflix, and if done right, it can redefine the way audiences interact with content creators.
If Bloomberg’s report is accurate that Netflix House is intended to promote new shows and movies rather than generate revenue, then this concept should go back to the drawing board.
Retail is an expensive operation. The suggestion that this experience should not be revenue generating is concerning, even short term. There is exceptional potential within this concept that is ripe for today’s consumer but nothing lasts in retail if it does not generate revenue.
In an era of increased online shopping and a multitude of options, entertainment is beginning to take center stage as a key driver for consumers to visit physical stores. The demand for a more personal connection and positive experience with beloved brands is reshaping the retail landscape. Brands that embrace this shift, from pop-up experiences and brand-centric events to tailored promotions, like Lululemon and Nike to name a few, are poised for success. Considering Netflix’s core brand mission statement, “We want to entertain the world,” now is the opportune moment for them to explore a move into the retail space and offer their customers that entertainment experience outside of their homes.