the streamer’s plan to dominate Disney

In mid-June, Netflix announced the locations of the first two Netflix Houses – “experiential entertainment venues” in major shopping centers that are the exact opposite of the Netflix and Chill experiences.

The stores are located in former department stores at the King of Prussia Mall near Philadelphia and the Galleria Dallas Mall. They both span more than 100,000 square feet and offer “regularly updated immersive experiences, retail therapy and a taste of Netflix series and movies through unique food and beverage options,” according to Marian Lee, the company’s chief marketing officer.

When announcing the move, Netflix co-CEO Ted Sarandos said “don’t think of it as Disneyland,” causing everyone to immediately think of it as Disneyland. Netflix has already won the streaming wars, with 269 million subscribers versus Disney+’s 153 million, but Disney still dominates in the real world. But to many observers, Netflix Houses look a lot like the first step toward large-scale Netflix theme parks: tanks on Disney’s lawn.

“Disney’s parks, cruises, theater shows and merchandise represent 30 to 40 percent of revenues and a large majority of profits,” said Tom Harrington of industry experts Enders Analysis. While Netflix is ​​somewhat behind them, Disney is, he says, “the obvious North Star when it comes to creating entire worlds around IP creations and characters.”

Netflix has been dabbling in this space for a while – in Toronto, there’s a murder mystery dinner called Perfect Bite, inspired by Daniel Craig’s Knives Out mystery Glass Onion . Los Angeles has hosted both the Netflix Bites food pop-up and Squid Game: The Trials , a non-lethal but nerve-wracking version of the gruesome Korean game show. Kuala Lumpur’s Banyan Tree Hotel is offering Spill the Tea , while London’s Lanesborough has Bridgerton Afternoon Tea , both essentially afternoon tea with a menu designed to look like something out of a Regency tabloid. Lanesborough’s collection of themed pastries and sandwiches – including Colin’s Travels , the Book of Eloise and the Lady Whistledown – costs a cool £85 with drinks included.

Then there are the touring experiences that have already passed through London and which have excellent potential for shopping centers – Melbourne’s Fever Exhibition and Experience Centre, a large warehouse in the suburb of Brunswick, currently hosts the touring Bridgerton Queen’s Ball every weekend.

The Queen's Ball: A Bridgerton Experience in Chicago

The Queen’s Ball: A Bridgerton Experience in Chicago – Chicago Tribune

Unlike actual royal balls, there are two or three a day where crowds in vaguely Regency costumes line up to see show memorabilia before dancing around in a loose version of dances from the show. In Sao Paulo, the Stranger Things Experience is currently located in the Shopping Eldorado mall – it’s a four-room walk-through with memorabilia, a bit of interactivity and some 3D effects. The Area 15 indoor entertainment complex in Las Vegas is home to a virtual reality game based on Zack Snyder’s film Army of the Dead, which is essentially a zombie shoot ’em up.

Finally, at London’s Phoenix Theater there is the Stephen Daldry-directed play Stranger Things: the First Shadow, a prequel to the TV series. It’s not exactly mall-friendly, but the technology involved in the staging – especially in the first 15 minutes – has the feel of a Stranger Things theme park ride.

But a distinct lack of IP and franchises has held Netflix back from going much further than this; unlike Disney, it doesn’t have a vast treasure trove of Pixar or Marvel characters to build coasters around. In 2022, the company announced it was looking for its own Star Wars ; it hasn’t found it yet.

A Netflix-themed pop-up restaurant in Los Angeles, July 2023A Netflix-themed pop-up restaurant in Los Angeles, July 2023

A Netflix-themed pop-up restaurant in Los Angeles, July 2023 – Getty

But the cupboard isn’t exactly empty. In 2018, the streamer signed deals with the estate of CS Lewis for the Narnia franchise and the estate of Roald Dahl to develop most of the novelist’s best-known books – with the notable exception of James and the Giant Peach, Danny the Champion of the World and Fantastic Mr Fox.

In 2021, Netflix acquired the entire Roald Dahl Story Company and announced that the deal would “enable the creation of a unique universe across animated and live-action film and TV, publishing, games, immersive experiences, live theater consumer products and more.” New film director Dan Lin – producer of Sherlock Holmes and The Lego Movie – has been vocal about his desire to have more IP, and experiences are part of that strategy.

“In the US, business growth is now driven by charging existing subscribers more – or charging freeloading users for the first time – which will inevitably hit a ceiling,” Harrington explains. “Netflix must start building complementary businesses if it wants to continue its upward trajectory. These include gaming and advertising, as well as growing merchandising and experiences that, if executed, should only intensify the bigger brands’ fandom and increase engagement.”

One of the problems with monetization of streaming platforms like Netflix is ​​its global reach. Netflix creates its content or buys all the rights from production companies, then shows the content worldwide and… that’s it. In the past, studios and broadcasters have been able to sell the same piece of content many times over. Movies and TV shows are licensed abroad for a certain period of time to a number of different buyers rather than being sold in perpetuity. After a while they return to the sender. This is known as ‘windowing’, which means you create the show and then sell the show or movie to the same person over and over again.

Indeed, in recent difficult times – Covid excepted – it is the theme parks that Disney has relied on. In 2023, the parks division – known as “experiences” – was the best performing part of Disney’s business. It posted revenues of $32.5 billion in 2023 – 36% of the company’s total revenue, but 70 percent of operating income. Disney’s entertainment business, including movies and TV, represented 45 percent of revenue but only 11 percent of operating income.

The question is how long it will take Netflix to build an experience business that can generate Disney-style revenue. Disney parks are incredibly well-oiled, iconic destinations. People treat them like vacation spots and stay longer than they would at competing theme parks – often a full week or more. Many customers stay in Disney hotels on-site, eat three meals a day on dining plans and pay extra for character experiences. Pricing is structured to encourage longer trips, with admission prices discounted for longer stays. Disney World has about 300 stores, almost all of which are based on the location in the park they’re in, and the shopping experience is part of the destination’s appeal, with exclusive merchandise. This is, after all, a company with its own corporate fan base, and there are actual people who visit the parks to trade pins and badges.

As the website DailyDose enthuses: “Disney Pin Trading is a fun, interactive experience where Disney Guests can trade specially marked Disney Pins with Cast Members and other Guests. Both kids and adults can join in on the fun, collecting Pins of their favorite characters, attractions and parks!”

The Star Wars 'Rise of the Resistance' attraction at Disneyland, CaliforniaThe Star Wars 'Rise of the Resistance' ride at Disneyland, California

The Star Wars ‘Rise of the Resistance’ ride at Disneyland, California – Lucasfilm via AP

Disney CEO Ted Sarandos has said that Netflix House is “something you might go to a couple times a month, not just once every couple of years.” The company will certainly get the property at a bargain price. Both of the 2025 locations are former department stores that are now vacant.

“Our real estate clients are eager to rent to whoever wants to occupy the space,” says Patrick O’Brian, retail research director at GlobalData. “If you get a global global brand space, it’s very attractive. In Britain we have seen many smaller ventures, such as crazy golf courses, taking over some of the old BHS and Debenhams stores that were struggling to be re-let, but we have not yet seen one truly successful entertainment concept emerge spread like wildfire. ”

O’Brian, however, isn’t sure Netflix will guarantee traffic instead of just relying on it. “It depends on the mission they’re attracting in terms of shoppers; gyms that take up a lot of space don’t really have a halo effect in malls,” he points out. “People go there with a different mission and then they leave. And one of the keys to success is going to be keeping the offering fresh, so people keep coming back for what’s new.”

As for the future, online theme park forums are already rife with ideas for Stranger Things attractions: an Upside Down-themed land; an indoor roller coaster based on Eleven’s powers; a live show based on the Battle of Starcourt mall. Netflixland here we come.

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