Online television subscription service Netflix is now a firm fixture in millions of homes across the world. It has enjoyed great success in recent years, adding subscribers en route to becoming a $9bn business. One of the key drivers of this success has been the company’s Netflix Originals shows. These are created by the company itself and provide a USP as the content is exclusive to Netflix. The company is aware of how vital these shows are and continues to develop more. The acquisition of Scottish comic book firm Millarworld is an example of backwards integration as it gives Netflix ownership of established characters around which it can build Originals shows.
Millarworld is a comic book company based in Glasgow, Scotland and has seen great success since it was established 15 years ago. Millarworld’s character universe may not be as large as Marvel’s, nor does it boast the fame afforded to Marvel by characters such as Captain America, The Hulk, Ironman, or Spiderman. It does however, have characters that have already been the subject of successful Hollywood adaptations in Kingsman and Kick-Ass.
As such, Netflix can be confident that Millarworld offers characters that translate well to the TV or movie screen. Furthermore, these franchises have established, ready-made fan bases that Netflix can tap in to, as do other comic characters from Millarworld that are yet to hit the screen.
Netflix knows that many subscribers only maintain their membership because of these shows as they are not available anywhere else (at least not legally). This USP gives it an edge over its competitors, many of whom now follow a similar model, and that is why shows like House of Cards, Orange is the New Black, and Narcos have all seen (and continue to see) renewals for several seasons.
The acquisition will allow Netflix to create original content based around Millarworld characters and the company’s positive prior experiences with adapting comic book characters from Marvel bodes well. Owning them this time means there are no costly licensing fees and it also opens up the revenue stream of merchandise, a first for Netflix.
It’s a shrewd acquisition on Netflix’s part and if it proves successful, it will be a surprise if it is the first and last time Netflix engages in M&A activity.