Netflix’s share priced soared to an all-time high on Thursday after the company beat its subscriber growth target in the third quarter. The video streaming giant added 5.3 million subscribers in the past three months, bringing its total to 109 million subscribers. Revenue climbed 30 percent to $2.98 billion while net income more than doubled to $130 million. Netflix currently generates most of its revenue from streaming, but it recently entered into a partnership with Target that could mark the birth of an important new business for the company: licensed merchandise.
As Netflix continues to invest heavily into original content, it creates immensely popular brands that might as well be monetized in every possible way. During the earnings interview that Netflix publishes along with its results every quarter, the company’s founder and CEO Reed Hastings suddenly changed into an “ugly Christmas sweater” that was immediately recognizable for fans of the hit show “Stranger Things”. “We’re learning how to do merchandising”, Hastings noted and, as the following chart illustrates, that lesson could prove very worthwhile in the long run. Licensed merchandise is a billion-dollar business and Netflix’s growing portfolio of cult shows and characters should be easily marketable.