Netflix faces an enviable dilemma. This summer, "K-POP Demon Hunters" unexpectedly became the streaming giant's most successful animated musical film to date. The movie has dominated Netflix's charts for over four months, amassing 325 million views, while its soundtrack continues to rank on Billboard.

Despite its success, retailers and toy manufacturers initially underestimated the original animation, resulting in minimal pre-launch merchandising plans. Consequently, related toys won't hit shelves until Q1 or Q2 next year, missing the critical holiday shopping season. Adobe forecasts U.S. online holiday spending in November and December alone will exceed $250 billion, up 5.3% YoY.

Analysts note that for Netflix, consumer products remain a minor business, with toys and apparel primarily serving as marketing tools rather than revenue drivers. The real challenge lies in transforming "K-POP Demon Hunters" into Netflix’s first wholly owned blockbuster children’s IP, which could yield long-term benefits far surpassing seasonal toy sales.

**Retailers’ Collective Miscalculation** Fueled by word-of-mouth buzz, catchy music, and viral online trends, this film about three singers saving Earth from demons quickly became Netflix’s most-watched movie ever. Yet even its creators were surprised by its meteoric rise. Netflix CMO Marian Lee admitted:

"This was a happy accident—a perfect storm of factors meeting an exceptional film."

Early test screenings drew lukewarm reactions, and retailers showed little interest despite Netflix’s advance pitches featuring product designs and plot details. Past disappointments with original franchises like Universal’s "Migration" and Pixar’s "Elemental" likely contributed to their skepticism. Moreover, Netflix lacks a strong toy industry track record—its popular kids’ shows like "CoComelon" and "Gabby’s Dollhouse" are third-party IPs. Even Mattel’s toy line for Netflix’s canceled series "Karma’s World" flopped.

**Scrambling for Solutions** Post-success, companies—especially from K-POP’s East Asian roots—flocked to Netflix: - Nongshim launched themed ramen. - Samsung’s Everland Resort in South Korea opened a special themed zone. - KakaoTalk added character stickers. - Paris Baguette released themed cakes and cookies.

"We’re overwhelmed with inbound requests," Lee noted. Currently, official merchandise is scarce, limited to card games, wooden decor, phone stands, and apparel.

Toy production faces bigger hurdles. Securing shelf space at Walmart or Target requires over a year’s lead time. In an unusual move, Mattel and Hasbro agreed to share the master license, dividing production by expertise: Mattel handles dolls and action figures, while Hasbro focuses on plush toys. Tim Kilpin, Hasbro’s president of toys and licensing, stated:

"This story has all the ingredients for a lasting IP."

Disney veteran Emily Horgan compared it to delays faced by "Frozen" and "Cars," where holiday demand initially outpaced supply. She added:

"While 2025’s holiday lineup could’ve been stronger with earlier planning, fans will stay engaged if Netflix executes well. We have a shot at making 'K-POP Demon Hunters' a heavyweight IP."

**Sequel in the Works: Netflix Sustains Momentum** To bridge the toy gap, Netflix is aggressively maintaining hype. Originally allocated modest marketing funds, the film now benefits from a flood of social media content on Instagram and TikTok, plus collaborations with food and beauty brands.

Netflix hosted sing-along theatrical screenings and partnered with Spirit Halloween for costumes. Reports suggest spin-off shorts are under exploration.

The ultimate test lies in delivering a high-quality sequel. With years needed for animated productions, Netflix recently finalized a deal with Sony for a second film. By 2029, when the sequel premieres, toy makers will be ready.

While Netflix has reshaped Hollywood over the past decade, it still trails studios like Disney, Universal, and Warner Bros. in building evergreen IPs that generate billions annually from theme parks and merchandise. Its biggest franchises—"Bridgerton" and "Stranger Things"—remain lightly commercialized.

Now, as kids await "K-POP Demon Hunters" dolls and plush toys, the real question is whether Netflix can turn this surprise hit into its first self-owned children’s megafranchise.