Master Investment
Published in

Master Investment

Netflix Launches Online Shopping Store — “Can Netflix Become Disney Before Disney Becomes Netflix”

Netflix Shop

Netflix’s recently launched an online merchandise store that is currently selling T-shirts and hoodies themed on its popular anime series Yasuke and Eden. Currently, It’s just a designer streetwear and is priced in the range of $30 to $82; which is nearly half a year of a Netflix subscription.

Many are betting on “Can Netflix Become Disney Before Disney Becomes Netflix”. It won’t be too optimistic to say that, Netflix launching its proprietary merchandise could be one of the many steps that can make Netflix another trillion dollar company. As a shareholder of this wonderful company I am really excited about this news and would like to share with you all what it could mean for the company and its future growth.

Netflix Launches Online Shopping Store — “Can Netflix Become Disney Before Disney Becomes Netflix”

We all know Netflix as a streaming service which is generating great content worldwide at a rate that no other media company can match at this point in time. Now if Netflix starts to create and sell the proprietary merchandise of its popular shows, it means only one thing; More revenue streams and profits for this great company. To give you a perspective here are some popular shows which made more than 50 billion dollars by selling merchandise only.

source: https://en.wikipedia.org/wiki/List_of_highest-grossing_media_franchises

Here we are talking about only single shows; Netflix has wide array of popular shows at this point in time and more will come in future. So this is just the beginning. Moreover, Why Netflix would even stop here, it may follow the footsteps of Disney and can open its own theme parks.

Imagine yourself experiencing the Stranger Things dark ride or printing money like they did in money heist. I am not the most creative guy here, but I am pretty sure people working at Netflix are much more imaginative and creative than I am. The goal here is to give you a glimpse of opportunities that lie in front of this great company.

To understand how much theme parks can affect the profitability of Netflix; lets see how much theme parks contribute to Disney’s total revenue.

Annual Report of Disney (source: sec)

And guess what, Theme parks contributed 37% (approx.) of Disney’s total revenue in 2019 or 26 billion dollars. Then there is cruise business based on popular series, where Netflix can venture into and many other possibilities like video games, toys, etc. Netflix is even hiring executives to lead consumer products, podcasts and video games as per Bloomberg report. These are the services which do not exist right now in Netflix’s portfolio.

Not only Netflix is venturing into different business areas; it has also changed its content creation strategy. If you have noticed, Netflix is now producing shorter and less number of episodes in each season. This makes Netflix agile and brings in 2 major benefits.

By producing shorter and less number of episodes, Netflix spends less as compared to its peers while creating new content; Especially, when company do not know whether that new content will be popular or not.

Secondly, Netflix gets a feedback from the audience or viewers by spending less, whether they liked the series or not. And if viewers loved a series, Netflix will know and can produce more seasons of that series and in turn will keep viewers glued to its streaming service.

Pretty neat strategy to keep its existing subscribers engaged and loyal to its service, even if Netflix increases its subscription price every other years. I mean Netflix has already increased the subscription price 5 times in last 7 years, without a negative impact on its user base.

source: Statista

This new strategy of Netflix makes it Agile and gives it an ability to not only save costs, but also to create diversified content quicker than its competitors. I haven’t even discussed any numbers yet and it looks like this is a great buy already.

As warren always say, Invest in great businesses at fair price and they will make you rich over time.

I won’t be discussing any numbers in this article and would instead encourage you to do some more research, read Netflix’s financial statements and annual reports and make your own opinion. If you don’t know how to read or interpret financial statements of a company, then watch this video, where I have explained with examples how to read a financial statement.

If you liked what you read, then don’t forget to “clap” or “like” this article :-) Besides that, I like this company and also own its shares. I will continue to add to my existing position over time. If you are interested to know which stocks I am buying and selling and want to get access to my complete portfolio. Then consider joining master investors community by clicking here.

If you found this article or any other articles on my channel valuable, buy me a cup of coffee from here.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Ankit Goyal

Ankit Goyal

Agile coach, founder of “master investment”, and a writer. Discovering myself anew by writing and vlogging — masterinvestment.official@gmail.com