Self-built derivatives e-commerce, Netflix’s second curve?

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Self-built derivatives e-commerce, Netflix's second curve?

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Netflix, which has been advancing by leaps and bounds in the field of streaming media, recently announced the launch of its online mall Netflix.shop, heading into the e-commerce field. Although only 18 products are currently on sale, it can be seen that Netflix’s move is a signal to enter the IP derivative consumer goods track.

The 2020 epidemic has brought new growth to the global streaming media market and also put more pressure on Netflix. As the “epidemic dividend” fades, the giants have moved in different ways to compete for market share in streaming media.

Although gradually holding a large number of high-quality original IP, from the past, Netflix’s attitude towards the realization of original content has always been relatively ambiguous. This time the official opening of its own e-commerce platform conveys the desire to accelerate the realization of the speed. , To further open up the ambition of the consumption system around original content.

Compared with Disney, which has made the IP universe the ultimate, it is still unknown how Netflix’s actions in the IP licensing market will help its future development.

The century-old Disney and the complete closed-loop sales that it has accumulated over decades are difficult barriers for Netflix to break through. The vast universe of Disney implants the culture created by Disney into the hearts of the public to obtain the infinite continuation of IP. How to transform the IP of the relatively short-lived drama series at present is still a big problem for Netflix.

Netflix launches e-commerce platform, enters the IP derivative consumer goods track

In June of this year, Netflix announced the opening of its own e-commerce platform Netflix.shop. On the official website, Netflix stated that Netflix.shop will become its new narrative method in addition to film and variety shows, hoping to provide users with more opportunities to connect with their favorite stories.

Currently, Netflix.shop only sells 18 items, including a robotic alarm clock priced at $135, and a T-shirt at $30. Most of the rest are clothing and accessories ranging from $30 to $135.

These products have one thing in common, that is, they are all Netflix’s IP peripheral products, such as the animation “YASUKE” based on the legendary Japanese black samurai Yasuke, and the anime “Eden” launched this year. It is reported that the upcoming products include other popular original drama series, such as “Stranger Things”, “House of Cards”, and “The Demon Hunter” series of peripheral products.

Self-built derivatives e-commerce, Netflix's second curve?

Beginning on June 10th, Netflix.shop has been officially launched in the United States. On the official website, Netflix stated that it will continue to market in other countries in the next few months.

Netflix’s deployment of its IP-derived consumer products began with the global hit of “Stranger Things”. In 2016, Netflix’s original series “Stranger Things” became popular worldwide. Netflix responded quickly and announced a collaboration with the young American fashion brand Hot Topic to sell derivative products of “Stranger Things”, such as clothing, coffee cups and character toys. Realize original IP content.

Prior to this, although there has never been an official peripheral, Netflix has never stopped licensing its IP to external companies to do peripherals. Earlier this year, the series “Bridgetown” was airing. Netflix took advantage of the popular lines in the show and cooperated with the clothing company Phenomenal to start selling sweatshirts inspired by the show. In May, Netflix teamed up with Super7 animation “YASUKE” to launch peripheral toys.

Self-built derivatives e-commerce, Netflix's second curve?

Clothing and accessories are not the only direction for Netflix in IP-derived consumer products. 2019, Netflix had authorized outside vendors to make “Strange Story” RPG games, as well as “magic crystal” of Switc H tour play.

Obviously, Netflix’s ambitions in the IP derivative consumer goods track do not stop there. In March 2020, Netflix hired Josh Simmon , the former head of Nike’s global strategy , and appointed him as president of consumer products. During the epidemic last year, Netflix subscribers exceeded 200 million. At the same time, the Netflix consumer product team increased from 20 to 60, and reached sales agreements with Walmart, Sephora, Amazon, and Target, and sold them through the platforms of retail giants in various fields in the United States. Clothing, toys, beauty suits and household items related to the drama series products.

The basis for Netflix to monetize original content is the original content that it can get and users are willing to pay for. It has been 11 years since Netflix was launched as a streaming service platform for the international market. From buying the copyright of the drama to exploring the production of original content, Netflix has no advertising revenue, relying on the monthly subscription fee paid by its 208 million subscribers to support the entire revenue.

In recent years, Netflix, which holds a number of ace IPs such as “Stranger Things”, “The Kingdom”, “The Crown”, and “Descendants Abandoned Soldiers” has gradually gained more control over IP, and it is no longer enough to authorize its own IP to externally produce peripheral consumer products. Netflix.

Self-built derivatives e-commerce, Netflix's second curve?

For the current Netflix, attracting 200 million subscribers in front of the screen to consume in reality can broaden its revenue channels and increase the offline dissemination of the series. The collateral effect may bring even more even Realize.

In the announcement on the official website, Josh Simon, President of Consumer Products, said, “From clothing and toys to immersive activities and games, we have been studying how to expand the world of our stories for fans. That’s why we launched Netflix today. .shop. It will combine selected products and rich stories to provide users with a unique Netflix shopping experience.”

The time has come, Netflix’s competitiveness on the e-commerce track

The starting gun of streaming media platforms on the IP derivatives track has already been fired. In comparison, Netflix is ​​a late entry streaming media platform.

Since opening its own IP universe for the first time in the 1980s, Disney has always followed the principle of draining the profits of each IP, and has created an animated image as a gold mine that can generate revenue in rounds. With Hollywood giant, Warner, Universal Studios and other head also follow the footsteps of Disney, with DC, “Harry Potter”, ” Friends ” series IP Warner, and holding a small yellow people , “Fast and Furious”, etc. The IP Global has gradually made its own way in the IP consumer goods track.

According to a study conducted by License Global magazine on the IP derivatives market in 2019, global sales of licensed products were 292.8 billion U.S. dollars, of which Disney, the number one, accounted for 54.7 billion U.S. dollars. In this list, Warner, Universal, CBS and other established film and television companies occupy the top ten positions, but the total marketing amount on the track is less than half of Disney’s, and Netflix did not enter the top 150 at that time.

Self-built derivatives e-commerce, Netflix's second curve?

The global influence of Disney and its IP derivatives has not been surpassed so far. When Disney produces a movie, as Jay Rasulo, former Disney’s chief financial officer, said, “Every aspect of the company is brand-oriented and franchising.” It is not just about the movie itself, but how to turn the story into Goods, services, experiences and other derivative products.

From Disney theme parks all over the world to the dolls of Disney animated characters everywhere, Disney does not stop at attracting users to consume more goods, but transforms it into a culture-“wear a princess dress to Disney” has become A lot of children’s dreams. As of the end of 2020, Disney owns and operates approximately 200 stores in North America, 60 stores in Europe, 45 stores in Japan, and 2 stores in China.

Online original content production, coupled with the high degree of dissemination of offline culture, and a variety of profit channels give Disney a more critical advantage over Netflix, and it also continues the vitality of its IP. According to data from Tit Lemax in 2019, 8 of the 20 most profitable IPs in the world are from Disney, including the century-old Mickey Mouse, with a cumulative economic value of 355.1 billion U.S. dollars.

Self-built derivatives e-commerce, Netflix's second curve?

The complete consumption system that Disney built offline also further feeds Disney+, which went online a year and a half ago. At the JP Morgan Conference held in the United States on May 24, Disney CEO Bob Chapek said that Disney’s direct-to-consumer business provides Disney+ with a lot of consumer information, “If we put Combining the data of all Disney links for in-depth mining, then we know how to increase the number of Disney+ subscribers.”

Although Netflix has made rapid progress with its high-quality original content in recent years and has gained more than 200 million subscribers, it took only two years for the rising star Disney+ to accumulate 100 million subscribers worldwide. Although Netflix holds so many ace IPs, it has not fully realized the potential of these heavyweight IPs.

As Warner, Global, Amazon and other leading companies enter the track of streaming media platforms, Netflix, which has a single subscription revenue, has to find new growth points. For Netflix, the time to enter the e-commerce track has come.

However, the number of ace IPs does not mean that its IP derivatives have inevitable bright prospects.

Mark A. Cohen, director of retail research at Columbia University School of Business, is skeptical about the longevity of Netflix.shop. He believes that “unlike Disney’s IP derivatives, the vitality of Netflix’s IP will come and go, and it will weaken after the end of the series.” Compared with the short vitality of Netflix’s IP, Disney has been planning for decades. The IP universe can easily fill the shelves with Pixar, Marvel, and “Star Wars” derivatives.

Self-built derivatives e-commerce, Netflix's second curve?

Netflix is ​​also aware of its disadvantages against established companies like Disney. In recent years, Netflix has added a lot of animation and game-related content to its streaming media library, including “Yasuke”, “Voltron”, “Eden”, “The Demon Hunter” and the upcoming “Assassin’s Creed”. Among the products currently available on Netflix.shop, animation derivative products also account for the vast majority. All these niche content may lock in more potential audiences and support the expansion of its derivative consumer products market.

Gold financial media body The Motley Fool suggested that investors Netflix incoming electricity providers can be compared with the Chinese electricity supplier business model B station. Last year, the “e-commerce and other” revenue of station B more than doubled, accounting for nearly 13% of its revenue, which shows that a streaming video platform that specializes in animation can successfully operate an e-commerce platform.

How does Netflix respond to the rising competition in streaming media?

In 2020, the global streaming media market has experienced unexpected growth due to the epidemic. As a result, Netflix has increased 37 million subscribers, breaking the growth record, and its annual profit has increased by 76%, making it the fastest-growing streaming media platform during the epidemic.

Although the market value has exceeded 230 billion U.S. dollars, Netflix’s business model has always been single, that is, producing high-quality original content to attract users to pay for subscriptions. The growth of Netflix’s revenue depends entirely on the growth of users. Once paying users reach the ceiling, Netflix’s business model will fall into trouble. Netflix’s 2021 Q1 financial report shows that the new users in the first quarter were only 4 million, which was lower than the 6 million expected.

In the past two years, global streaming media competition has gradually heated up, and giants Disney, Apple, and Paramount have all entered the game one after another. The real problem for Netflix is ​​how to gain more market share in the increasingly competitive streaming cake.

From the perspective of membership prices, since 2010, Netflix’s membership fees have risen 5 times. The most recent one was in October 2020, the standard package was raised from US$12.99 to US$13.99 against the trend, and the premium package was raised from US$15.99 to US$17.99. Compared to its main competitors HBO Max ($14.99), Hulu ($11.99), Disney+ ($7.99), Apple TV+ ($4.99), Netflix has no price advantage.

Paramount and HBO Max are also trying to increase users by launching an advertising version of membership packages. In June of this year, HBO Max launched HBO Max With Ads at a cheap monthly price of US$5 (US$9.99), and Paramount+ reduced its advertising version of its membership package to US$4.99 a month.

At the level of original content, various streaming media companies are also constantly deploying, increasing the weight of users’ competition. In April of this year, Amazon acquired the old Hollywood film company MGM for US$8.45 billion, and it owns 5200+ movie rights and franchise rights to the 007 series to strengthen the content of the series of Amazon’s streaming media platform Prime Video. Competitiveness. In May, Warner and Discovery Channel reached a merger agreement. In addition to its own 64 million subscribers around the world, HBO Max added 15 million subscribers to Discovery Channel to complete an increase in the exploration content.

Self-built derivatives e-commerce, Netflix's second curve?

And Disney, a strong opponent of Netflix’s entry into the IP-derived consumption system, recently stated on the Investor Day that by 2024, Disney will spend as much as US$9 billion on Disney+ content investment each year, including 50 international projects. Netflix expects to spend more than $17 billion on content this year. Faced with the threat from Disney, Netflix has successively purchased comic publisher Millarworld and its IP copyright, and invested a lot of money in children’s original programs.

With the fierce competition in streaming media, Netflix urgently needs to explore new business growth points.

As early as 2019, Netflix began its layout in the game vertical category. Its well-known drama series “Stranger Things” was adapted into games for various game platforms in 2019. One is a cross-host, PC, and mobile platform game “Stranger Things 3: The Game” produced by BonusXP; the other is a work in Finland A mobile game based on the world view of “Stranger Things” produced by NextGames. In addition, Netflix has reached a partnership with Telltale, the developer of “The Walking Dead” and “Game of Thrones”, to substitute the latter’s games on the platform. In 2020, Netflix also released a strategy game adapted from the series “Magic Crystal: Age of Resistance”.

Self-built derivatives e-commerce, Netflix's second curve?

However, the response from these series-derived games was mediocre. Therefore, Netflix began to focus on the interactive long video of the game-“Black Mirror: Bandersnatch” was its first attempt. In May of this year, people familiar with the matter said that Netflix was looking for an executive to help it expand its video game business to provide users with game services in a similar way to online video game subscription platform Apple Arcade. Although Netflix has responded so far that its game expansion plan is “still in flux,” it also proves that Netflix is ​​striving to find a breakthrough from the streaming media business.

Netflix.shop is another move for Netflix to break through the inflection point. To produce high-quality content and convert it into more business opportunities, whether Netflix can break through the siege and remain on the throne of the “king of streaming media” still needs further data support.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/self-built-derivatives-e-commerce-netflixs-second-curve/
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