What does the Millarworld acquisition mean for Netflix?

What does the Millarworld acquisition mean for Netflix? Netflix recently acquired comic book publisher Millarworld. Will the addition of the Millarworld universe continue to attract subscribers to its fold? Shashank Venkat finds out

Subscription giant Netflix has pulled a rabbit out of the hat. After its strong showing in the second quarter, Netflix has gone ahead and made its very first acquisition – comic book publishing house Millarworld. Founded by Mark Millar, the Millarworld universe is home to popular franchises such as ‘Kingsman’, ‘Kick-Ass’ and ‘Wanted’. While the price of the deal has not been disclosed, it is known that ‘Kingsman’ and ‘Kick-Ass’ are not a part of the deal. Under the deal, Millarworld will continue to exist and develop new stories for the Netflix label.

The Millarworld acquisition fits neatly within Netflix’s strategy of creating compelling content for its subscribers. Undoubtedly, the success of comic book adaptations from the Marvel Universe such as Daredevil, Jessica Jones and Iron Fist will have given Netflix the confidence required to go down this route. Netflix will leverage the Millarworld characters to develop newer TV shows, films and kids’ series broadening its own catalogue of content.

The acquisition shows that Netflix is committed to build upon its existing programming around comic book superheroes. It will also help the streaming company to add to its arsenal of self-produced shows that reduces its dependence on licenses from other studios. Netflix has already declared that it wants to own 50 percent of the content on its platform and this new deal will take the company closer to its goal. Owning the content also gives Netflix complete control over the international licensing rights, which is important considering the fact that its worldwide subscribers have overtaken US subscribers recently. 

Potentially, this move may also help Netflix explore a new line of revenue in consumer products. It has already started wetting its feet through merchandising around the show ‘Stranger Things’. Superhero merchandise is an extremely viable opportunity and characters from the Millarworld universe will certainly help Netflix create a new line of business through apparel, toys, collectibles and comics. Moreover, consumer products also help create more buzz for the shows resulting in a win-win for the OTT platform.

This deal also represents a growing trend in Hollywood where big companies acquire comic book publishers. Disney had bought Marvel Studios in 2009, a move which has worked wonders for the company. Warner Bros. have already made a lot of profits around characters from its subsidiary, DC Comics. Earlier this year, Twentieth Century Fox had also made a strategic investment in comic book and graphic novel publisher Boom! Studios. The Netflix-Millarworld adds to this line of big-ticket deals. In fact, Mark Millar already made public his excitement about only the third such deal in history

Netflix has been steadily increasing its lead in the subscription streaming market with a number of popular, original shows. The company is facing stiff competition from Amazon Prime Video, Hulu and other local players. It is likely that in the coming years we will see more content studios roll out their own streaming services. In that sense, this move by Netflix gives it a good edge over its competitors as Millarworld sits on a wealth of good content ideas. Netflix may continue to acquire content creators if they can help the streaming giant scale quickly. However, it will have to tread the line carefully, since it may also antagonise existing content partners.

The company will also have to make sure that it continues fortifying the back-end technologies that power the user experience. Netflix was one of the first big businesses that showcased the merits of a seamless subscription billing experience. Netflix’s simple subscription management system has resulted in a powerful, ongoing relationship with its subscribers. The streaming service will have to ensure that this core aspect of their user experience is not disrupted amidst constantly evolving product catalogues, third party content and newer packaging options. The subscription business model has helped Netflix achieve global success, and it is a potent weapon in the hands of the company to continue delivering a customized user experience to its subscribers.

Of course, the huge negative free cash flow burden will continue to remain a worry for investors. But, as long as Netflix can do the one thing that it does best – produce stellar content – subscribers will continue to throng the video streaming platform!