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CNBC: Netflix Sees No Profits From 'Stranger Things' Collectibles

Jayson Derrick

"Stranger Things" branded waffles and other Netflix, Inc. (NASDAQ: NFLX)-themed food products, games and collectibles do not benefit the streaming video company as much as one would expect, according to CNBC.

What Happened

Netflix is a streaming video company at its core, with no consumer products division, CNBC's Sarah Whitten reported Thursday.

The "Stranger Things" backpack, socks, and many other items are only made possible through brand partnerships.

Netflix collaborates with retailers to create merchandise, but the company doesn't collect revenue from licensing its brand to retailers, a Netflix spokesman told Whitten.

So instead of a new revenue stream from collectibles, Netflix is only receiving exposure from them and using the products as a form of advertising.

Why It's Important

A common misconception among investors and Netflix subscribers is the term "original content." The term means that Netflix is the first platform to offer a show or movie to its viewers.

This doesn't mean that Neflix owns the original content. The streaming service owns less than 10% of its original content, CNBC quoted Wedbush analyst Michael Pachter as saying. 

"It’s why you don’t see massive advertising campaigns and merchandising for shows like 'The Crown,' 'House of Cards,' 'Orange is the New Black,' 'BoJack Horseman' 'Big Mouth' and 'The Chilling Adventures of Sabrina,'" CNBC said. 

What's Next

Netflix's heavy investments in original content are a strategy the company uses to grow its subscriber base, Whitten said in the Thursday story.

It is difficult to accurately model whether the original content or other factors are responsible from driving growth, the report said. 

The cash burn associated with years of heavy investments may soon ease, as Netflix expects its cash burn to peak in 2019 and improve in the years to come. 

Netflix shares were down 1.42% at $376.28 at the time of publication Friday. 

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Netflix's Tough Week: Disney Poaches Top Executive, 'The Office' Moving To NBC

Photo courtesy of Netflix. 

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