There is a possibility that Netflix is sitting at the end of a rainbow, and they just found out about the pot of gold. What we are talking about is the possibility of a stand-alone business selling merchandise based on original content.
According to one expert, RBC's Mark Mahaney, Netflix could be sitting on a potential billion-dollar business. Popular films are already taking advantage of such profit avenue. You probably saw a lot of Iron Man mugs, t-shirts and other merchandise right before and after a big Avengers movie premiere. Netflix is exploring the possibility of monetizing the same way, but only with smaller screens.
Mahaney also added that such move has a real potential for success. However, it is true that consumers behave differently when it comes to big movie films and small screen series. Thus, there is some risk involved with the idea. Still, you simply cannot ignore the idea because of the cost versus reward ratio.
If it fails, Netflix is expected to lose a couple of million dollars in the process. However, if it does succeed, Netflix could potentially be sitting on a billion dollar business.
As of the moment, Netflix is still grasping the idea, and the plans are still in their infancy stages. Despite that, Netflix is starting to get its feet wet. Recently, it started testing the idea with "Stranger Things" merchandise.
Stranger Things is one of the biggest successes for Netflix, so it makes sense to start from there. Also, signs are pointing out that Netflix is truly serious about the idea, and they are starting to position themselves for the long haul.
Bloomberg unearthed that Netflix listed a job posting last February, specifically looking for an executive to lead a licensing department for apparel, soundtracks, collectibles, gaming toys, comics, and books.
For Netflix, there is another reason why merchandising shows incredible promise. Merchandising popular shows may also be a very good idea in terms of keeping consumer's interest.
According to the job listing that Netflix posted, they are pursuing the idea of consumer products as they believe they will bring in and maintain buzz and awareness to their shows. Furthermore, they are doing it with something more interactive, curated and tangible. The idea of licensing products is also their way of helping their shows stay on trend for longer periods.
In the entertainment business, the idea of merchandising is not new. In fact, you would expect this merchandise to show up when an upcoming big title is going to hit the big screens. Netflix is just exploring the idea if such move translates directly in the realms of small screen shows and series.
While there is risk involved, the math is on their side. Merchandising will not just increase Netflix's bottom line significantly, but it could also serve as a promotional tool. It's like hitting two birds with one financially secure stone.