LOS ANGELES, July 18 (Reuters) – Netflix (NFLX.O) broke Hollywood’s rules to create an $82 billion global streaming colossus that the rest of the entertainment industry immediately wanted to copy. But as growth slows, it’s looking backwards for a way forward, borrowing a page from Walt Disney’s (DIS.N) playbook.
The company, which transformed the way we watch TV and movies, aims to emulate the success of Mickey Mouse and “Star Wars” by seeking to build brands that span film, television, games and consumer goods, executives said told Reuters in recent interviews.
Netflix teams are planning ways to get more out of Netflix’s larger shows and films with universes and characters they can return to again and again. The franchise strategy, details of which are first reported here, is intended to complement Netflix’s efforts to build a massive library of original programming with something for everyone.
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“We want to have our version of ‘Star Wars’ or our version of ‘Harry Potter,’ and we’re working very hard to build that,” said Matthew Thunell, the Netflix vice president who is credited with discovering Stranger Things becomes. “But they are not built overnight.”
Netflix’s franchise initiative comes at a critical time after two rounds of layoffs due to subscriber losses. It’s scrambling to build a lower-cost, ad-supported version of the service, which it once promised never to do. On Tuesday, the company is expected to report the loss of 2 million more subscribers when it reports quarterly results. Its shares are down 70% this year.
Some of Netflix’s current partners, who have requested anonymity to protect their ongoing business relationships, said they are frustrated by what they see as a lack of collaboration between the film and television groups. This has hampered efforts to capitalize on success through sequels, spinoffs or film adaptations of a hit series, they said.
“It feels like you have to fight your way to building a franchise there,” said one studio exec.
Thunell offered a different view. He and a company spokesman described an environment of close collaboration between creative leaders who independently greenlight projects but work toward the same goals.
“In a traditional studio, there are these big walls between the feature team, the animation team and the series team,” he said. “Since Netflix is a very young company, those walls just never had time to be built.”
“Stranger Things” treatment
Netflix execs point to “Stranger Things” as a role model. Now in its fourth season, the sci-fi series has inspired merchandise from a Surfer Boy frozen pizza at Walmart to Magic 8 Ball toys from Hasbro, plus live experiences. A Stranger Things spin-off series and play are in the works. Continue reading
Hot on their heels, Netflix executives said they plan or are in the process of giving at least a dozen series and movies the “Stranger Things” treatment.
The Spanish series La Casa de Papel has been remade in Korean and has a spin-off in the works. A prequel to the Regency-era drama Bridgerton has been ordered, as has a no-one-die reality competition inspired by South Korean drama Squid Game. The fantasy series The Witcher has spawned an animated film and is getting a prequel.
The company also identified three upcoming shows as potential franchises as the stories are well known and attract a built-in audience.
The Three Body Problem, an adaptation of the first book in a Chinese sci-fi trilogy, is currently in production with Game of Thrones co-creators David Benioff and DB Weiss as executive producers. One Piece, based on a Japanese manga series, is being filmed, and a live-action adaptation of the animated series Avatar: The Last Airbender has just wrapped up filming.
Of course, not every story works as a franchise.
Executives want to produce franchises from Millarworld, the comic book publisher Netflix acquired in 2017. The first Millarworld series, Jupiter’s Legacy, was canceled after the first season. There are currently six new projects in development and one more in production, said a spokesperson, adding that Netflix has plans to explore the villains of Jupiter’s Legacy in a new series.
“It has to start with the story itself. Does it sustain that kind of expansion?” Thunell said. “There are some series like ‘Stranger Things’ that are insanely successful, that have the depth of mythology and additional stories that allow you to move into animation, feature film or anime. “
UPRISING MOVIE FRANCHISES
The film studio, which started from scratch five years ago, sees a handful of up-and-coming franchises: Enola Holmes, about Sherlock’s teenage sister, Knives Out, an Agatha Christie-esque crime thriller, Old Guard, about a team from immortal mercenaries, action thriller Extraction and zombie fairy tale Army of the Dead.
The spy thriller “The Gray Man” starts on Friday. Directors Anthony and Joe Russo, whom film executive Scott Stuber called “franchise builders” at the film’s Los Angeles premiere, said they created a rich world poised for expansion.
“We definitely designed and thought through this narrative in a way that we could continue it in other forms,” said co-director Anthony Russo in an interview.
Netflix ramped up its franchise-building efforts with an October 2020 reorganization under new global TV head Bela Bajaria, a former Universal Television executive who created such Netflix comedies as “Unbreakable Kimmy Schmidt” and “Master of None.” .
As subscriber growth slowed in the fall of 2020, Bajaria sought to squeeze more out of expensive deals with producers like “Bridgerton’s” Shonda Rhimes. She also formed a team to develop prestige series and spectacles (often large, effects-driven fantasy series) that could grow into franchises.
Netflix added consumer products staff and hired internal book scouts to find works to adapt, rather than waiting for outside agents or publishers to bring material to its executives. Thunell called this step a “game changer”. A video games division was also created.
The company has begun involving marketing and consumer products staff early in the franchise building process. For example, these teams recently traveled to London to meet with Benioff and Weiss on the set of Three-Body Problem.
Army of the Dead producers Zack and Deborah Snyder provided input on a virtual reality experience during filming, according to Josh Simon, head of consumer products and live experiences at Netflix. His team is now working with the Snyders on ideas for their next film, Rebel Moon.
“We got really deep into production meetings,” said Simon. “We can work years in advance because we have that level of trust and collaboration with the creators.”
Steven Ekstract, CEO of Global Licensing Advisors, said “Stranger Things” alone has the potential to generate $1 billion in annual retail sales by 2025 from products, events and potentially a theme park ride or digital avatars.
Netflix would rake in around $50 million to $75 million in royalties from those sales, plus free advertising for merchandise. To reach that level, Netflix needs to engage people with the world of Stranger Things, he said.
The streaming service has significantly less experience building franchises than its century-old Hollywood competitors, noted Julia Alexander, director of strategy at entertainment research firm Parrot Analytics.
“Do we have the same faith in the Netflix machine as we have in the Disney machine? No, but part of that is because Disney has spent years determining what this machine looks like,” Alexander said. “For all Netflix’s dominance in the streaming space, they’re still relatively new to building these kinds of worlds.”
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Reporting by Dawn Chmielewski and Lisa Richwine in Los Angeles; Edited by Kenneth Li and Cynthia Osterman
Our standards: The Thomson Reuters Trust Principles.