“We recognize the importance of bringing those trends directly to our customers, and fast,” Evans said in a blog post.
Entertainment Licensing: Netflix Dives Into Consumer Product Sales
Experts in the sector, like Global Toy Experts CEO Richard Gottlieb, say the move is part of a new trend that will have profound impacts on the entire licensing industry. Last month, TLL reported on a groundbreaking deal between LEGO and Amazon that Gottlieb described as “historic.”
In that agreement, LEGO game Prime Video the rights to air its hit Asian animated series The Monkie Kid, and gave Amazon the exclusive rights to market and sell merchandise connected to the show. Then, just a week later, Amazon announced it would also be exclusively selling merchandise from a show called Do, Re & Mi, a children’s show that Prime Video owns and that was produced in conjunction with French studio Gaumont.
The common thread is that Amazon is taking advantage of its ability to directly sell products en masse for shows that air on its Prime Video streaming service. Monkie Kid and Do, Re & Mi were the first two agreements that will see Amazon winning both the streaming rights and the product distribution rights in a single deal.
Gottlieb expects to see more of that in future, and says it could point to a huge advantage for Amazon that changes the way toy companies look at content and product licensing, and who they choose to work with.
“This is profound, this is really an historic moment,” said Richard Gottlieb, the founder and CEO of Global Toy Experts, and Publisher of Global Toy News. “I mean, Walmart, Amazon and Target can all sell lots and lots of product, but what Amazon has that Walmart and Target do not have is the ability to stream video to a very broad audience. This will deepen and broaden brand equity, brand visibility, and should really boost sales. It’s huge.”
Gottlieb also predicted, with what turns out to have been uncanny accuracy, the likelihood of Netflix turning to a major retailer like Walmart in order to compete with Amazon’s retail might.
“No one else (other than Amazon) has that unique ability to so completely combine media with product,” Gottlieb said last month. “I’ve maintained for a while that the silos have just collapsed, and that entertainment and product have merged. I think this is highly significant.
“I will be very interested to see if Walmart and Netflix want to have a talk, and perhaps do something similar.”
Well, as it turns out, just one month later that’s exactly what’s happened, and Gottlieb doesn’t believe that’s a coincidence. “It occurs to me this happened pretty fast, and it seems reactive,” Gottlieb says. “I mean, it’s hard for me to believe the Walmart deal has been in the works for a long time. In terms of how effective it will be, it’ll be different because at this point Netflix doesn’t have the ability to sell directly like Amazon does, but they also have a bigger audience.”
Gottlieb also says he expects Netflix to make more moves in the direct-to-consumer space, in order to keep pace with Amazon and, for that matter, the very effective Shop Disney ecommerce site where products are sold from Disney+ and Disney box office films.
“I would look at Netflix to buy some sort of ecommerce company,” Gottlieb said. “If they’re going to match up, they’re going to need to do what a lot of Chinese companies are doing, which is that everything they do is an opportunity to sell something.”
While Netflix is relatively new to the CP sector, Hollywood studios like Disney or Warner Bros have for many years sold merchandise from their best known franchises, and have generated billions of dollars in annual sales.
By contrast, Netflix has traditionally generated almost all of its revenues from a single source, that being subscriptions. And, with subscriptions now topping more than 200 million, growth is starting to slow down due to market saturation. Netflix knew the only path to growth was to diversify, and earlier this year it announced its deep dive into Consumer Product licensing and sales.
The first key move by Netflix was the hiring of Josh Simon, a former Nike executive who now heads the Netflix consumer products division. By June, just two months after Simon was hired in March 2020, the CP division of Netflix had grown to 60 people, and the company said it was fast making in-roads with big retailers to sell its products, including Walmart, Amazon, Sephora, and Target. Next up, Netflix announced in June the creation of its own online ecommerce store, although the streamer acknowledged it still expects to sell most of its Merch through big retailers like Walmart and Target.
Video Game Licensing: Another Revenue Stream As Netflix Diversifies
Netflix also announced in June it was launching a video game subscription service, similar to Steam or Stadia, and earlier this month the company acquired its first video game developer, the critically acclaimed Night School Studio.
Now, it appears Simon and his team are pushing hard to boost licensed product sales. Netflix actually began selling merchandise through Walmart in 2018, but shoppers would have to search for their merchandise among the millions of other items on the store. By creating its own store within a store, Netflix merchandise is now easy for consumers to find and visit directly.
Through this new ecommerce hub, Walmart shoppers will be able to buy products based on hit shows like Squid Game and Money Heist, as well as a growing range of more family-friendly shows like the preschool series Ada Twist, Scientist and Waffles + Mochi, produced by Barack and Michelle Obama.
By expanding its presence within Walmart, Netflix hopes to better access the consumer market, and gain more flexibility to put their merchandise up for sale with less fuss and delay.
Walmart also says it’s doing something new with Netflix, creating a service called Netflix Fan Select, which allows fans to vote for merchandise they want to see created from a show. Walmart said it would then work with the show’s licensing teams to create and sell those types of products.
Netflix Snags Senior Producer From Disney+, While Facing Lawsuit for ‘Poaching’ Employees
Netflix Snags Senior Producer From Disney+, While Facing Lawsuit for ‘Poaching’ Employees