Imitation is the sincerest form of flattery. Just ask Netflix.
“We’ve launched more than 50 experiences in 25 cities, and Netflix House represents the next generation of our distinctive offerings. The venues will bring our beloved stories to life in new, ever-changing, and unexpected ways,” Marian Lee, Netflix’s chief marketing officer, said.
If the concept of taking original IP and turning it into an immersive, in-person experience sounds familiar, that’s because it is.
That’s Disney’s formula.
The Walt Disney Company began as a cartoon studio but expanded to theme parks in 1955 with Disneyland in California. It’s since launched theme parks worldwide. It also added other experiences, like cruise lines, resorts, and residential real estate communities.
Theme parks are a major money maker for Disney. Its experiences division, which includes theme parks, was Disney’s top earner in 2023, bringing in $32 billion in revenue.
Netflix, meanwhile, made about $32 billion in total in 2023.
So it’s not surprising that the company, looking for ways to add to its bottom line, sees Disney as a role model. At a 2019 conference, former Disney CEO Reed Hastings said that Netflix admired Disney.
But media and retail analysts told Business Insider that while Netflix is taking a page from Disney’s playbook, the end result might look different.
How Netflix can expand beyond streaming
David A. Steinberg, CEO of Zeta Global, called this phenomenon “clicks and bricks,” which refers to a consumer’s desire to merge online spaces and the real world.
Consumer data collected by Zeta Global found that “the vast majority of transaction research is done on the internet, but the vast majority of transactions are still created in the real world,” he said.
It’s a recipe that Disney has perfected over decades of operating its theme parks and other experiences. One of the newest additions to its collection is Tiana’s Bayou Adventure at Disney World, a ride based on the 2009 film “Princess and the Frog.”
While Netflix House will likely attract its subscribers, Resonate MCO Ericka McCoy said the potential for new audiences can’t be overlooked. That includes younger generations who are desperate for real-world connections.
“There’s a big opportunity for Netflix to make this a really interesting experience that not only captures Netflix watchers but a significant portion of cinema-goers looking for that new thing,” she said. “They should be able to capture those audiences that are loyal to concerts.”
Netflix could rescue struggling shopping malls
Netflix investing in shopping malls might seem at odds with headlines announcing the “retail apocalypse.” However, Steinberg said there’s still money to be made in these establishments.
“Malls are certainly having problems in a large component of the country, but it’s a very low-cost way of getting large amounts of foot traffic,” Steinberg said.
He said that Netflix would likely get more foot traffic in a mall than if they built stand-alone shops.
“Even though numbers might be softer than in the past, these are two of the biggest and most frequented malls in the country,” Steinberg added, referring to King of Prussia and Galleria Dallas.
McCoy told BI that the physical space offered at these malls is perfect for “voluminous experiences.”
“Think of Hollywood Studios,” McCoy said, referring to the Walt Disney World theme park. “You have that opportunity to create stages. Immersive experiences where you’re walking into a set. You can’t do that in a small space, and you’d have to build it from scrap.”
On the other hand, OptiMine Software CEO Matt Voda says securing a Netflix House venue could be a win for mall operators trying to replace anchor tenants.
“It’s a way for them to avoid more boutique things that might be more expensive because the mall operators are so hungry to get consumers to show up,” Voda said.
Voda added that Netflix has an “analytic advantage” over smaller brands since their data can reveal fan interests and passions — something that can steer business decisions.
“They know how many fervent fans there are in any given location, so they’re able to reduce a lot of the variables that are big risks in retail,” he said.
Netflix House and then Netflix World?
All three experts told BI that Netflix House could usher in a more immersive era for the company, but it’s too soon to know Netflix’s official endgame.
“Is this just a brand play to drive engagement and awareness of Netflix, or is there a bigger economic opportunity where they might do something like a theme park?” Voda said. “I think they would have to test this and see if it sustains itself over the years.”
Steinberg leaned away from theme parks and suggested Netflix expand its permanent locations by making the experiences richer.
“That could be rides, or that could be virtual experiences,” he said. “Part of it could be opening themed restaurants.”
“I guess time will tell,” Voda added.
