Netflix Hopes ‘Stranger Things’ Can Be Its Billion-Dollar Franchise

Days before the July 4 holiday in the U.S., hundreds of fans of “Stranger Things” lined up along the beach in Santa Monica, California, to attend a fair modeled after the Netflix Inc. show. Clad in shirts with the names of characters and the high school in fictional Indiana, they waited more than an hour to ride a Ferris wheel, eat ice cream and snap selfies in a photo booth.

The event, one of two in the U.S., is part of the biggest marketing campaign ever undertaken by Netflix, the world’s largest paid online TV network. Over the past few weeks, Netflix has attached “Stranger Things” to Schwinn bikes, Nike shoes and Coke soft drinks -- all to hype the Independence Day arrival of the show’s third season.

On Monday, Netflix begins a long promotion with Microsoft Corp. The tech giant is bringing back Windows 1, the first version of the software that made it the most valuable company. The app includes Microsoft Paint and the word processor Write, as well as games and videos from “Stranger Things.” The show is set in 1985, the same year Windows 1 was released.

Like any campaign, this one is designed to draw in current fans and attract potential new ones. And it worked. The third season was viewed by 40.7 million households in its first four days, a record for Netflix. More than 18 million households watched all eight episodes.

But it’s also an important test of whether Netflix can turn “Stranger Things,” already its most popular original show in the U.S., into something much bigger. The company, with worldwide subscribers approaching 160 million, is beginning to angle for a piece of the $122 billion consumers spend on entertainment-linked merchandise.

“The category is massive, and Netflix wants to play a part,” said Gene Del Vecchio, a consultant and adjunct marketing professor at the University of Southern California. “They are going to need a strategic plan if they really want to reap the benefits as they go forward.”

The world’s largest entertainment companies are built on properties like “SpongeBob SquarePants,” “Star Wars” and “Batman” that remain in the public eye via T-shirts, games and toys long after people stop watching the latest season. “Star Wars” has generated more than $20 billion in merchandise sales -- a virtuous cycle in which T-shirts and action figures drive ticket sales for each new movie.

For all of Netflix’s success, it has struggled to dispel industry criticism that it churns through projects, never giving a show more than a few weeks in the spotlight. The Los Gatos, California-based company cancels the vast majority of new series after just a couple seasons because viewership falls off. Sustaining interest is the key if Netflix wants its shows to sell toys, clothing and video games.

“Stranger Things” debuted over the July 4 weekend in 2016 with little fanfare. A quirky piece of nostalgia for the 1980s, the show was created by two brothers without a hit to their name and a cast full of kids and journeyman actors. The creators were initially concerned because they saw few billboards or traditional marketing materials.

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