This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
It's easy to be skeptical about last week's launch of Netflix's (NASDAQ: NFLX) online merch store. The new platform -- available via Netflix.shop -- is limited to selling T-shirts and hoodies themed to its Yasuke and Eden anime. It's just designer streetwear right now, and it's not cheap. T-shirts range in price from $30 to $45. Hypland's Yasuke hoodie is going to set you back a beefy $82, or nearly half a year of a Netflix subscription.
However, you may want to think twice before you dismiss the leading premium video service's chances here. There are some good reasons to bet on Netflix's latest move. Let's check them out.
1. Netflix is just getting started
This is obviously just the opening act of Netflix.shop. You can get third-party -- admittedly unlicensed -- shirts for a lot less elsewhere. It will be harder to duplicate the Yasuke and Eden action figures that Netflix is promising will roll out later this month.
Limited-edition apparel and decor inspired by Lupin -- with the second season just dropping into your Netflix queue -- will hit the digital storefront this month. Last week's launch also teased upcoming exclusive Stranger Things and The Witcher product lines. Reports also have Netflix working on a Bridgerton clothing line alongside live events. And Fans of La Casa de Papel -- aka Money Heist -- should be on the lookout for proprietary merch.
Don't judge Netflix's new foray into the e-tail of physical merch based on what you see on today's landing page. The store will get bigger, and you'll get there once they roll around to paddling a new revenue stream based on one of your favorite shows.
2. Never underestimate the Netflix audience
It's not smart to bet against Netflix. It doesn't make a move unless it has thoroughly thought things through. How many times were we asking Netflix to rent video games by mail during its red envelope days? How many analysts have wondered about the money that Netflix could rake in it if sold ads on top of its streams in this era of rising connected-TV rates?
Netflix is way smarter than me. It may also be smarter than you when it comes to how it runs its business. Bloomberg is reporting that Netflix is in the process of hiring heads of consumer products, podcasts, and video game businesses that don't currently exist. If they see the light of day -- as we're seeing with consumer product -- it's because the company knows what it's doing.
Netflix had 207.6 million subscribers at the end of March, and we're talking about entire families here. The reach and breadth is larger than the account base. It's a captive audience spending hours a day getting lost in Netflix's growing digital catalog of content.
Folks trust Netflix to get it right. They stick around, even if it means prices keep moving higher. Netflix has increased its monthly rates in the U.S. five times over the last seven years, and the sub count is always higher by the time the next hike rolls around.
Netflix is a media stock. It's not a surprise that traditional media behemoths are generating significant sums of incremental revenue through vibrant consumer product sales. Why wouldn't Netflix -- a company that's been collecting gobs of data on your viewing habits for years -- be as good at nailing what you'll want to buy next as it is at knowing what you want to view next? We may never see a theme park, though I would be the first in line through the turnstiles of Netflixlandia to ride the Ozark roller coaster or experience the Stranger Things dark ride. Selling unique merch to an engaged audience will be a lot easier, and unlike that Ozark coaster there are no height requirements or seat restraints to keep you from making the most of the consumer products ride.
This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.
