Why Netflix should go into retail

Right now, Netflix makes money in one revenue stream: subscriptions. People pay to watch TV and movies directly from their computers, and the company is making a killing, but will the trend continue?

Unless Netflix unlocks and integrates an unheard-of level of AI into their algorithm to influence customer experience, there’s a serious opportunity for Amazon and Apple to capture market share.

Scott Galloway, in his recent article LAnd of the Undead, went into detail about how users have no reason to visit and remain on Netflix’s platform aside from watching movies. While Netflix captures insane amounts of attention, its share of eyes is nothing next to the amount of human energy invested into Amazon’s and Apple’s products.

Galloway outlined how Netflix is going to fall behind because of their lack of distribution capabilities and the lack of attention spinoff into other revenue streams — e.g., in Amazon’s and Apple’s cases: Kindle and iTunes.

This is why I think Netflix should go into retail.

Hear me out.

Think about all the times you’ve seen a movie and you’ve thought the main character was a total badass, or maybe someone who you just really admired. If you don’t go as far as wanting to be them (trust me, I’ve been there), you at least want to be like them in one or more ways.

Now, what if Netflix offered you that opportunity directly from the movie? What if all you needed to do was click on the item of clothing that captured this person’s essence or select the piece of furniture you oh so badly wanted and you could have it at the touch of a button?

Netflix could easily open a Netflix shop. They could sell fan swag, books that inspired the movie, and clothing/furniture that your favorite characters use. They would open another stream of revenue to diversify their wealth and capture a bigger share of the entertainment/movie geek market.

Could Netflix eat Amazon? Probably not. But maybe. In fact, in the long run, I’m fairly confident it’ll happen the other way around. I think the deciding factor will be in how each company leverages the data they’re given. How do they combine capture my biometric data and analyze it to determine which movies and products are going to make me tick?

Obviously, it’s possible that none of this will happen. It could be a horrible idea. I think it’s great. But it could be horrible.

If you read this, let me know your feedback; I’m keen to hear another point of view.