Netflix has hit max Netflix. The streaming company wants you to know that 40.7 million households around the world started watching the third season of Stranger Things within the first four days it was made available.

“@Stranger_Things 3 is breaking Netflix records!” the company’s corporate Twitter account tweeted on July 8. As well as topping the 40m mark – the first Netflix film or series to do so in such a short time period – the company boasted that 18.2m households had already finished the entire season.

Historically, Netflix has never released viewing figures for its streams. It’s only in the last year that the company has started to reveal any viewing figures for its shows: 80m in four weeks for horror film Birdbox, 23m for docu-drama When They See Us. They’re colossal figures, but they’re selective disclosures – you’re unlikely to hear when a show does less well than hoped – and Netflix doesn’t have any advertisers to please with the big numbers anyway.

And it’s not really the viewing figures for Stranger Things that make the series such a success for the platform. As with traditional mega-hit franchises – think things like Star Wars, Toy Story and Batman – this time around Netflix is cashing in on its intellectual property (IP). “With streaming, TV has increasingly become about IP (owning the programme rather than just licensing it) as that allows the greatest flexibility in how you release it and means you aren’t restricted for how long [it remains streaming],” says Tom Harrington, a senior research analyst in broadcasting at Enders Analysis. So it’s not just about attracting huge crowds (although that helps); it’s about creating a franchise that can be monetised in different ways.

IP is the reason Netflix has been spending billions on content – it’s set to splash $15 billion in 2019 – with large amounts going on its Netflix originals shows. These are the titles only available on Netflix (although this doesn’t always mean they are made by Netflix). “Some of its biggest ‘original’ shows aren’t owned to the extent of Stranger Things, which is essentially self-produced,” Harrington says. Other popular series such as The Crown, Orange is the New Black and House of Cards have been created with the help of other studios.

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This focus on IP may only become more important. For Netflix, the release of Stranger Things season 3 has coincided with the announcement that two of its most popular shows in the US, Friends and The Office, are being stripped from the platform by WarnerMedia and NBCUniversal; both companies are set to increase their own streaming offerings. At the same time, it will be losing some of the world’s biggest movie franchises as the November launch of Disney+ gets closer. (The three largest grossing movies of 2018, Black Panther, Avengers: Infinity War, and Incredibles 2 are all owned by Disney.)

With Stranger Things, Netflix has seen the value in exploiting its IP. It’s realised that there’s huge value in the show’s name, as well as its popularity, and it wants to make the most of that. For this third season, the Netflix marketing team has gone into overdrive. It’s partnered with Coke for New Coke references, added the Upside-Down to Fornite and launched a huge partnership with Microsoft around Windows 1. This is just the tip of the iceberg in its mission to turn its top show into a standalone franchise.

The company has a number of different types of partnership types around Stranger Things. Brand partnerships are intended to help increase fandom around the show and don’t involve any money, while consumer products directly generate revenue for the streaming service. It’s unlikely at this stage that any money from these deals would be more than Netflix’s huge marketing budgets.

A spokesperson for Netflix said there is no product placement in the show. “None of the brands and products that appear in Stranger Things 3 were paid for or placed by third parties,” the spokesperson said. “They’re all part of [show creators] The Duffer Brothers’ storytelling, which references 1980s consumer and popular culture.”

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But the potential effect of all this cross-branding is huge. It helps to create more Stranger Things hype, merchandise and in the end new revenue streams for Netflix. It’s something the company sorely needs – but one that will take time to develop. Netflix has long-term debts of more than $10bn and is raising more money through bonds to help keep it spending on new shows and films.

When the first season was released way back in 2016 there was little merch available. Now season three has arrived there are Nike Stranger Things trainers, a Secret Cinema version and more t-shirts than anyone needs. There’s even a Stranger Things game, although it was called “tedious” by Eurogamer and “boring” by Kotaku.

So far, Netflix has struggled to exploit other shows in the same way. A recent report by The Information has suggested that shows on Netflix bring in more subscribers for their first two seasons; after that there’s not as much value to them. This makes shows that get renewed beyond the first couple of series a standout success. “Stranger Things is a phenomenon – and Nielsen data suggests as much – but the viewing of most of their other originals falls away very quickly after release. It will disappear from your UI very fast if you don’t watch it,” Harrington says. He adds that concentrated short-term viewing is ideal for keeping people subscribed to Netflix but isn’t as valuable as creating TV brands with “appointment viewing”.

Stranger Things is an exception, and the bandwagon Netflix hopes to jump on by making use of its IP is a huge one. The success of the Harry Potter series saw it grow into a $25bn franchise by 2016. Frozen has its own merchandising ecosystem. And as far back as 2012, it was estimated that the Star Wars franchise had earned LucasFilm (now owned by Disney) more than $20bn in merchandise alone. Disney has been a master of capitalising on its IP; the first version of Disneyland opened July 17, 1955.

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Netflix hopes to learn directly from Disney’s success. In May 2018, Netflix hired Disney’s former head of merchandise for parks, experiences and consumer products, Christie Fleischer. At the time, the company said her role would be to oversee “retail and licensee partnerships, publishing, interactive games, merchandising and experiential events”.

Since then, we haven’t seen a Netflix theme park, but Netflix CEO Reed Hastings hasn’t ruled it out. (There was one Stranger Things season two event in the Universal Studios park). In early 2018, Hastings was pressed on a Netflix theme park. “That would be amazing,” he said. “Not in the short-term,” came the caveat. “Not in the next five or ten years.”

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