Los Angeles (Reuters) – Netflix (NASDAQ:NFLX) broke Hollywood’s rules to become an $82 billion global streaming giant that the rest of the entertainment industry rushed to copy. But as growth slows, it is taking a page from Walt Disney’s (NYSE:DIS) book to figure out how to move forward.
The company that changed the way we watch TV and movies wants to be as successful as Mickey Mouse and “Star Wars,” executives told Reuters in recent interviews. They want to do this by building brands that can be used in movies, TV, games, and consumer goods.
Teams at Netflix are thinking of ways to get more out of their biggest shows and movies by creating universes and characters that they can go back to again and again. The franchise strategy, about which this article is the first to give specifics, is meant to help Netflix build a huge library of original shows with something for everyone.
“We want our own “Star Wars” or “Harry Potter,” and we’re working hard to make it happen, said Matthew Thunell, the vice president of Netflix who is credited with finding “Stranger Things.” “But those don’t get built in a day.”
Netflix’s franchise plan comes at a very important time after two rounds of layoffs and a drop in subscribers. It is rushing to make a cheaper version of the service that is paid for by ads, which is something it once said it would never do. When the company reports its quarterly earnings on Tuesday, it is likely to say that it has lost 2 million more subscribers. Its stock has lost 70% of its value this year.
Some of Netflix’s current partners, who asked to remain anonymous to protect their business relationships, said they were frustrated by what they saw as a lack of collaboration between the film and television groups. They said that this has made it hard to make money off of a successful series by making sequels, spin-offs, or movies based on it.
One studio executive said, “It feels like you have to fight to build a franchise there.”
Thunell’s point of view was different. He and a company representative talked about how creative executives work closely together. They may approve projects on their own, but they all work toward the same goals.
“At a traditional studio, there are these big walls between the feature team, the animation team, and the series team,” he said. “Because Netflix is such a new company, those walls just never got built.”
How “stranger things” were handled
The people in charge of Netflix use “Stranger Things” as an example. The science-fiction show has inspired everything from a Surfer Boy frozen pizza at Walmart (NYSE:WMT) to Magic 8 Ball toys from Hasbro (NASDAQ:HAS), as well as live events. There will be a spin-off TV show and a play based on “Stranger Things.”
After “Stranger Things,” Netflix executives said they plan to or are in the process of doing the same thing with at least a dozen other shows and movies.
The Spanish show “La Casa de Papel” has been made into a Korean version, and a spin-off is currently being made. A prequel to the Regency-era drama “Bridgerton” has been ordered, as has a reality show based on the South Korean drama “Squid Game” in which no one dies. The fantasy series “The Witcher” has been turned into an animated movie, and now there will be a prequel.
The company also picked out three upcoming shows that could become franchises because the stories are well-known and already have fans.
The movie “The Three-Body Problem” is based on the first book in a Chinese science-fiction trilogy “David Benioff and D.B. Weiss, who helped make Game of Thrones, will be the show’s executive producers. “One Piece,” which is based on a Japanese manga series, is currently filming, and “Avatar: The Last Airbender,” which was made into a live-action movie, just finished filming.
Sure, not every story can be turned into a series.
From Millarworld, a comic book publisher that Netflix bought in 2017, executives want to make franchises. “Jupiter’s Legacy,” the first Millarworld show, was cancelled after the first season. A spokesperson said that there are currently six new projects in development and one in production. They also said that Netflix plans to make a new show about the bad guys from “Jupiter’s Legacy.”
“The story has to be the starting point. Does it have room for that kind of growth? ” Thunell said “There are some very popular shows, like ‘Stranger Things,’ that have a deep mythology and extra stories that let you move into animation, movies, or anime.”
Emerging film franchises
The film studio, which was started from scratch five years ago, has a few franchises that are just getting started. These include “Enola Holmes,” which is about Sherlock’s teenage sister, “Knives Out,” which is a mystery in the style of Agatha Christie, “Old Guard,” which is about a team of immortal mercenaries, and “Extraction,” which is an action-thriller “and “Army of the Dead,” a story about zombies.
“The Gray Man,” a spy thriller, comes out on Friday. At the Los Angeles premiere of the movie, film chief Scott Stuber called Anthony and Joe Russo “franchise builders.” Anthony and Joe Russo said they made a rich world with expansion in mind.
In an interview, co-director Anthony Russo said, “We’ve definitely planned and made this story in a way that it can be continued in other ways.”
Netflix’s efforts to build franchises were helped by a restructuring in October 2020. The new global TV chief is Bela Bajaria, who used to work for Universal Television and created Netflix comedies like “Unbreakable Kimmy Schmidt” and “Master of None.”
As the number of subscribers stopped growing in the fall of 2020, Bajaria tried to get more out of expensive deals with producers like “Bridgerton’s” Shonda Rhimes. She also put together a team to make prestige series and spectacles, which are often big fantasy shows with a lot of special effects and could become franchises.
SCOUTING MATERIAL
Netflix added people to work on consumer products and hired book scouts to find books to adapt instead of waiting for agents or publishers to bring them ideas. Thunell said that this move would “change the game.” It also made a unit for video games.
Early on in the process of building franchises, the company started to bring in people who work in marketing and consumer products. For example, one of these teams recently went to London to meet with Benioff and Weiss about the set of “The Three-Body Problem.”
Josh Simon, head of Netflix’s consumer products and live experiences division, said that Zack and Deborah Snyder, who made “Army of the Dead,” gave feedback on a virtual reality experience while they were filming. His team is now working on ideas for their next movie, “Rebel Moon,” with the Snyder brothers.
Simon said, “We’re really buried in production meetings.” “We can work years ahead because we trust and work with the creators to that extent.”
Steven Ekstract, CEO of Global Licensing Advisors, said that “Stranger Things” could bring in $1 billion a year in retail sales starting in 2025 from products, events, and maybe even a theme park ride or digital avatars.
Netflix would make between $50 million and $75 million in royalties and get free advertising from the sales of merchandise. He said that Netflix needs to keep people interested in the “Stranger Things” world in order to reach that level.
Julia Alexander, director of strategy at entertainment research firm Parrot Analytics, pointed out that the streaming service has a lot less experience building franchises than its 100-year-old Hollywood rivals.
“Do we trust the Netflix machine as much as we trust the Disney machine? “But part of that is because Disney took years to figure out what that machine looks like “Alexander said. “Even though Netflix is the leader in streaming, they are still pretty new at making these kinds of worlds.”