Remember when streaming was the side dish to red DVD-mailer envelopes? Today, Netflix (NFLX +0.60%) is running the opposite playbook: adding new businesses around the streaming service to deepen fandom, diversify revenue, and keep the story fresh.
Here's why I think the next five years could be a blockbuster (not the unfortunate Blockbuster, Inc.) sequel, not a tired rerun.
Image source: Netflix.
Netflix's next act
Netflix is spinning many new ideas these days. Some will surely be hits, others may be duds, but it's important to keep the innovative engines running. And a few experiments have already delivered some legit business results for Netflix.
Ads: A second engine, not just snackable revenue
After years of "no ads, no way," Netflix found a way: a lower-priced ad tier that's scaling quickly. Two monetization levers per subscriber (sub + ads) could lift the ad-tier's sales and profitability over time. Ad targeting, measurement, and quality should improve as Netflix gets comfortable with ad sales.
Think of it like adding another lane to a busy freeway -- same destination, faster throughput. Execution matters, but the early demand signals suggest advertisers want in, and Netflix has the content to keep them there.
Music: Hits that sing beyond the screen
KPop Demon Hunters didn't just stream; it charted and smashed records. The film has become a cultural moment with incredible soundtrack success and a character-driven costume craze. That's a blueprint: original music becomes marketing that pays you back, with touring tie-ins, licensing, and social virality turbocharging the next season or spinoff. When a chorus gets stuck in your head, it tends to drag a lot of viewing hours with it. And you can bet that Netflix will build a multi-movie franchise around this Korean-American phenomenon.
Experiences and retail: Fandom you can touch
"Netflix House" locations are slated for Philadelphia and Dallas this year, with the Las Vegas Strip on deck for 2027. Add a co-branded MGM Grand dining experience and toy partners Mattel (MAT +0.32%) and Hasbro (HAS 0.03%) -- sparked by the KPop Demon Hunters fever -- and you've got a flywheel that turns hits into habits.
These are partner-led models more than theme-park builds, so the capital bill is lighter while the brand impact can be heavy. In plain English: people will buy a ticket, a T-shirt, and a plate of chimichangas if the world is compelling enough.
Games: From retention to revenue
Today, games are a free add-on to Netflix's video-streaming service. Tomorrow, a genuine business model should emerge -- whether that's a premium tier, a switch to in-app purchases, cloud/interactive events, or curated premium releases tied to major franchises. There has to be a way to make serious money from Netflix's growing portfolio of video games.
The strategic upside isn't just dollars; it's deeper engagement that makes shows stickier and merch more desirable. It's easier to sell a car after someone has taken it for a test drive. Playing around inside fictional worlds can serve the same purpose.
Podcasts: Companion stories, companion economics
Audio is the low-cost, high-engagement wingman for big shows and films. Spotify (SPOT 0.15%) is already on board with a multi-year podcast partnership and talks are reportedly underway with Sirius XM (SIRI +0.37%) and iHeartMedia (IHRT 1.49%). Netflix can extend its worlds into commutes and workouts, monetize with sponsorships, and funnel listeners back to the screen. It's the bonus episode your ears can binge, and the podcast producers get access to a global platform with multimedia features. Win-win-win.
NASDAQ: NFLX
Key Data Points
Why this matters for investors
This mix of fresh ideas and throwbacks gives Netflix more ways to grow and profit. Subscriptions, ads, experiences, consumer products, games, music, and podcasts create multiple shots on goal. The company can miss with one and score with another.
Partner-led experiences and licensing can also be margin-friendly. Ad sales scale well in the long run, as long as Netflix keeps offering a large, loyal, and deeply engaged ad-viewing audience. Games and music can monetize existing video-based intellectual properties instead of starting from scratch.
The diverse approach gives Netflix a stronger business moat, too. Fandom that spills into the real world reduces churn and increases the company's pricing power. When your favorite show is also your weekend plan, you keep the subscription active. You know how Walt Disney (DIS +0.28%) builds world-class theme parks around its animated worlds and characters? Netflix is borrowing entire chapters from Disney's proven playbook.
Management has shown it can pivot when the opportunity is big enough -- from DVDs to streaming, then the password-sharing crackdown, and now cross-format content with audio, video, games, and lunch boxes. That adaptability is an asset.
What I'm watching, other than "Stranger Thngs" and "KPop"
Serious Netflix investors have a lot of interesting stuff to watch, without even touching that smart TV remote. For example:
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Can Netflix boost its subscriber counts while also lifting the average revenue per user (ARPU) -- all with the help of ad-subsidized subscriptions?
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Will the company benefit from partner-driven real-world experiences like Netflix House and the MGM Grand dining residency? The company must work out an effective balance between low-cost royalty deals and fully owned experiences.
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There's the toy sell-through trend and (hopefully) a predictable cadence of new toy-worthy hits.
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Will the monetized gaming service be as controversial as the media-streaming business idea was in 2011? Will it be as successful?
Netflix in 2030 won't look the same
I could go on, but you get the drift. The Netflix of 2030 will look very different from the pure-play video streaming giant you see today. That's how you keep a culture-changing growth story relevant in the long run -- never hesitate to change with the times, and to take the lead in some of the industry shifts.
The point is simple: I expect Netflix to keep growing and changing through 2030 as it turns compelling stories into compelling businesses. That's a program I'm happy to back. And I certainly don't mind paying more than 10% less for Netflix shares after October's sudden retreat.
