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Netflix Generates New Revenue Stream with Exclusive Online Store

  • Nadine Ghiran - SUBTA
  • Jun 17, 2021
  • 4 minute read

Netflix is making its way into the e-commerce space with the launch of Netflix.shop. The online shop will sell “exclusive limited editions of carefully selected high-quality apparel and lifestyle products,” according to a press release

This is the first time that Netflix will be selling products directly to consumers. Until now, Netflix has been making licensing deals with retailers, such as Target, to sell merchandise linked to its hit shows.

Netflix’s mark in the e-commerce industry could not come at a better time as subscriber acquisition numbers are lowering; until now, subscribers have been its one and only revenue stream. 

Learn how the entertainment giant is strategizing to scale its business while facilitating customer retention and revenue growth.

Having Multiple Revenue Streams

Netflix has remained at the top of the streaming industry since its conception and has since grown to more than 200 million paid subscribers, as reported in a letter to the company’s investors. The Covid-19 pandemic significantly supported the growth of these numbers. When state mandates required people to stay at home, many turned to subscriptions. Netflix gained 15.8 million subscribers in Q1 2020. 

This rapid growth of Netflix subscribers has gradually decreased as pandemic restrictions loosen. The company’s quarterly guidance for new subscribers in Q1 2021 was 6 million, but Netflix came up just shy of 4 million, while shares simultaneously dropped 11%. Now the company is forecasting only 1 million new sign ups in Q2.

While the pandemic boom is dwindling, streaming services should seek revenue growth opportunities now more than ever. Netflix, in particular, has had only one revenue source – through its subscribers – and will need to seek additional revenue streams to witness profit in the years to come.

“The only way the company will be able to continue revenue growth is by increasing its price,” says Paul Chambers, CEO of SUBTA, in our Covid Report.

What Will Netflix.shop Sell?

The first of Netflix’s online products are based on the anime series Yasuke and Eden. The streaming company partnered with several up-and-coming artists to bring the aesthetics of the two anime series to life.

Jordan Bentley, founder of the clothing retail business, Hypland, brought Yasuke to life through streetwear. Tie-dyed tees, graphic tees, and graphic hoodies are all a part of the artist’s collection, ranging from $30 to $82 a piece.

Photo credit: Netflix

Following Bentley is Kristopher Kites, a designer in residence at RSVP Gallery in Chicago. His exclusive collection features chains, pendants, and a collectible armor influenced by Yasuke, ranging from $35 to $135 a piece.

Another contributor, Nathalie Ngyuen, created two additional anime-inspired products for Netflix: a Yasuke Naruto Clock and an Eden Kendama.

On top of the already diversified anime merchandise, Netflix sought out BEAMS, a Japanese clothing store, to include streetwear for its Eden collection.

Netflix plans to debut exclusive collections and products for titles like Lupin, Stranger Things, and The Witcher

The Future of the Online Store

Netflix’s online store is open to the public, and streaming accounts are not required for access.

Additionally, Netflix says it will host immersive events and launch games as a part of this business strategy. Netflix.shop is currently only available in the United States and will expand to other countries in the coming months.

“We’re thrilled to give fans a new way to connect with their favorite stories, and to introduce them to the next wave of artists and designers who embrace the power of storytelling in all its forms,” says Josh Simon, VP of Consumer Products, in Netflix’s press release.

The Competitive Video-on-Demand Streaming Market

Netflix began the trek towards e-commerce early last year when it hired Simon as the VP of Consumer Products. He began with overseeing the production of merchandise tied to original productions like Stranger Things, To All the Boys: P.S. I Still Love You and La Casa de Papel. Now, he is leading Netflix into e-commerce.

Disney+, Netflix’s lead competitor, is already to the halfway mark of Netflix with 100+ million subscribers. It has over 200 stores in North America selling Disney-, Marvel-, and Pixar-branded products. With Netflix dabbling into e-commerce and identifying a second revenue strategy, it stands a chance to stay number one.

“Netflix is making the right steps towards closing the gaps between its business and customers,” says Chambers. “They’re maintaining customer loyalty, which will help them keep their competitive edge in the streaming industry.”

Key Takeaways:

  • Netflix launched an exclusive online store called Netflix.shop.
  • The shop will feature collections influenced by Netflix’s hit titles and created by up-and-coming artists.
  • Netflix acquired 15.8 million subscribers in Q1 2020, but barely 4 million in Q1 2021. 
  • The pivot to e-commerce as a second revenue source will keep Netflix ahead in the competitive streaming industry.

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