How Netflix’s New Shop Feature Takes Aim at Disney Merchandise

Rather than just sell stuff, Netflix recognizes its online shop represents “a new way for fans to connect with their favorite stories.”

In 1987, Disney was on a roll. Profits were up almost 80 percent and the company had 8,000 licensed products on shelves around the world. But then-CEO Michael Eisner wanted more. So he opened the first Disney Store, as a “natural extension of our company.”

“Every time there’s a new release of our classic movies, there’ll be something in the stores to remind you of that. I would hope that when we put out a new video of Mickey Mouse cartoons or of a Disney movie, the video will be sold in the stores. And when something is happening of some importance in the Disney Co., it will be reflected in the stores,” he told the Los Angeles Times at the time. “The stores are a great image … Especially if we have a lot of them around the country.”

The retail business has changed a lot in three decades, but Disney’s consumer products — from Elsa Halloween costumes to Baby Yoda plushes — have helped secure the company’s position of cultural dominance and continue to support its enduring zeitgeist chokehold. Now, Disney’s chief rival is taking a page out of the company’s playbook. Last week, Netflix launched, an online destination “combining curated products and rich storytelling.”

It’s a move that could address Netflix’s key streaming-wars shortcoming: the strength of its IP. Even when Netflix strikes gold, like with “The Queen’s Gambit,” a binge-watch phenomenon is awfully fleeting compared to the decades worth of fan investment around “Star Wars,” Marvel, and Mickey Mouse.

To combat the ephemeral, Netflix has what it calls a “uniquely Netflix shopping experience” that’s decidedly high-end and curated. There’s a $135 limited edition necklace crafted by jewelry designer Kristopher Kites and inspired by the “Yasuke” anime series, a series of “Yasuke” t-shirts and hoodies from Jordan Bentley’s drop-culture brand Hypland that range from $30 to $82, and a $50 kendama inspired by “Eden” designed by artist Nathalie Nguyen.

Coming soon: products inspired by “The Witcher” and “Stranger Things,” as well as Netflix logo-wear from Japanese fashion house Beams. The shop represents an expansion of Netflix’s product strategy, which includes deals with Walmart, Sephora, Amazon, and H&M and coincides with increased encroachment by Netflix into Disney’s turf: kids’ and family programming like “The Mitchells vs. The Machines” and summer blockbusters like “Army of the Dead.”

There’s a dedicated “Netflix” category on Target’s website, where the retailer sells hundreds of items tied into Netflix shows, including “Stranger Things” apparel and LEGO sets and even a “To All The Boys I’ve Loved Before” blanket. These mass-produced items are most directly competitive with Disney: Target in 2019 launched Disney stores-within-stores at 25 of its locations that offered some 450 items, including 100 products previously sold only at Disney Store locations.

Netflix’s goal is simple. “We love it when great stories transcend screens and become part of people’s lives,” reads a Netflix press release announcing the online store.

In a recent essay, former Amazon Studios exec Matthew Ball called Netflix’s strategy “love building” and said that it was designed to tap into a kind of relationship that Disney has forged for decades. “What really matters is that if a little girl wants to, she can easily wear an Elsa dress or sleep in ‘Frozen’ pajamas or a ‘Cars’ bed. This is incredibly potent mindshare,” he wrote in on his personal site.

Fans’ desire to have Disney IP in their homes and on their bodies has made Disney the most successful product licensor in the world. Its licensed products accounted for $54.7 billion in sales in 2019, over double the amount of its closet rival, Better Homes & Gardens publisher Meredith Corporation, according to a ranking by License Global magazine. That includes everything from Mickey Mouse watches to products inspired by “The Golden Girls,” the top seller among ABC properties.

WarnerMedia, Universal, and ViacomCBS are all in the top 10, but collectively bring in only half of what Disney does. Netflix doesn’t rank among the top 150.

Disney’s parks, experiences, and products division was its top-revenue driver in fiscal 2019, accounting for 37 percent of all income. That year, less than 16 percent of its earnings came from its studio.

Audience desire for more experiential media continues to increase. A recent study by UTA found that half of consumers say they strengthened their fandom during the pandemic. One fifth said they would be more willing to pay for exclusive content from celebrities and influences than they were prior to the pandemic. UTA argues that this translates into an opportunity to engage (and collect revenue from) more than over 30 million people in the U.S. alone.

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