Netflix House is right out of Disney's playbook: Analyst

Netflix (NFLX) announced an upcoming physical attraction called the "Netflix House," where consumers can interact with their favorite movies and TV shows in real life through immersive experiences.

Needham & Co. Senior Media & Internet Analyst Laura Martin joins Catalysts to give insight into Netflix's recent announcement and the platform's move into sports and live-event streaming.

"They were demoing it at the [2024 Netflix] Upfront where you can go in and have all of their hit shows in real life. So it's their version of a theme park. So they're sort of copying in a low capital intensity way... the Disney (DIS) playbook," Martin tells Yahoo Finance. "More merch, more video games... They continue to do innovative things. I think the return on capital for some of these things is unknown and unproven, but they're really innovative."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video transcript

I do want to also get another company name in here.

Laura, you also laid out the Bull and Bear case for Netflix.

In a recent note, the stock continuing to hit all time highs right along with the broader market here.

How much more room to run?

Do you think that Netflix has moving forward?

You know, they announced today that they're going to do their own version of physical.

I'm gonna call it theme parks, but it's more like a house where you go and you can do selfies.

Um They were demoing it at the upfronts where you can um go and inhabit all of their tit shows in real life.

So it's their version of a theme park.

So they're sort of copying in a, in a low capital intensity way.

They're copying the Disney playbook, you know, more, merge more video games more.

So that's sort of interesting.

They continue to innovative things.

I think the return on capital for some of these things is unknown and unproven, but they, they're really innovative and I think that's interesting.

Uh They do it all their own way.

But uh so I think, I think um they are, you know, what the greatest thing about Netflix right now is that they're buying sports rights and not increasing their content budget.

And more, and investors strongly believe that the return on um viewing, the viewing, the upside value from a sports activity is much higher than another dollar spent on entertainment content, which we sort of think is oversaturated and, and um commoditized.

Well, as you mentioned, live programming, a big catalyst for Netflix.

But to me profiting off live programming sort of requires advertising and sports itself just sort of requires advertising within it.

What do you think that means for Netflix's ad tier offerings?

Could you see a future where they don't offer an ad free option for subscribers?

Um That, so the Wall Street loves dual revenue streams.

No, I think, I think all these streamers will end up just like the cable business was 50% ad driven, 50% subscription driven.

It'd be silly to actually only have a single revenue stream.

Wall Street hates that because of the lack of diversification.

So, no, I cannot see that there are customers who will pay a lot of money to not have ads, usually rich people.

So no, you should offer them that if that's what the consumer wants.

So, no, I think these streamers including Netflix will end up in the end with 50% ad revenue, 50% subscription revenue and Wall Street likes that kind of mix best Laura.

I really appreciate you joining the show.

Thank you so much for the great conversation that was Laura Martin.

She's N and co's senior media and internet analyst.