A leader in the streaming space, Netflix Inc (NASDAQ:NFLX) could see a new effort to diversification with in real life experiences to strengthen its well-known franchises like "Squid Game" and "Bridgerton," which rank among its most viewed series.

While the new effort for Netflix's diversification could help the streaming giant, it could also mark a positive for the mall sector, which has faced setbacks from the COVID-19 pandemic and growth of online shopping.

What Happened: Netflix recently announced it will open two "experiential entertainment venues" in Texas and Pennsylvania at leading shopping malls.

"Imagine waltzing with your partner to an orchestral cover of a Taylor Swift song on a replica of the ‘Bridgerton' set – and then walking around the corner to compete in the Glass Bridge challenge from ‘Squid Game," Netflix said in a blog post.

The company said the new Netflix House locations will also have restaurants with food inspired by Netflix shows and sell merchandise from Netflix shows, continuing two recent growth initiatives from the company.

The locations, expected to open in 2025, will be located at the King of Prussia Mall in Pennsylvania and Galleria Dallas in Texas. Netflix said the locations will help create "an unforgettable venue to explore your favorite Netflix stories and characters beyond the screen year-round."

Related Link: Netflix Q1 Earnings Highlights: Revenue Beat, EPS Beat, 9.33 Million Paid Subs Added, Ad-Tier Plan Update And More

Why It's Important for Netflix: With 269.6 million paid subscribers, Netflix is a leader in the streaming space. The company is working to add subscribers to its ad-supported plans and also towards diversification efforts.

"We've launched more than 50 experiences in 25 cities, and Netflix House represents the next generation of our distinctive offerings. The venues will bring our beloved stories to life in new, ever-changing and unexpected ways," Netflix Chief Marketing Officer Marian Lee said.

For Netflix, the new locations are a way to diversify its revenue stream, with a place for its growing merchandise efforts and to test new shows and franchises.

Why It's Important To Shopping Malls: Netflix's first two Netflix House locations are set to open in two of the most popular shopping malls in America.

Simon Property Group (NYSE:SPG) owns the King of Prussia Mall, which has over 450 stores and 30 dining options. MetLife (NYSE:MET) is the owner of Galleria Texas.

The Netflix House locations will total over 100,000 square feet and occupy the home of former department store locations.

Large shopping malls across the country have lost anchor tenants, such as department stores and major retailers, due to bankruptcies and the rise of online shopping. This has led to shopping malls diversifying their efforts by having more dining options and experiences versus the large number of retailers.

Without having the option of replacing a large open space from a previous anchor tenant, the shopping malls face challenges that typically lead to putting in another anchor retailer or getting creative and using the space for a hotel or housing.

With Netflix moving into these spaces, shopping malls could benefit from filling vacancies, generating monthly rent, and potentially experiencing a surge in traffic as visitors come to enjoy the Netflix experiences.

For Simon, which owns hundreds of properties across the country, the Netflix House location could serve as a test for both the entertainment company and the landlord. Netflix refers to these as the first two locations, indicating plans to open more Netflix House locations in the coming years.

This could be good news for Simon, as it builds an early relationship with Netflix.

The addition of Netflix House centers could demonstrate that the largest malls, which are taking the initiative to diversify, are thriving in what was once seen as a declining market.

Traffic data from Placer.ai showed the top 100 indoor malls saw year-over-year growth of 6% in February and 9.2% in March. A decline of 0.6% year-over-year in April was cited as being due to the shift of the Easter holiday.

NFLX Price Action: Netflix shares trade at $684.90 versus a 52-week trading range of $344.73 to $689.88. Netflix stock is up 57% over the last year.

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Image created using artificial intelligence via Midjourney.