To any person who freakishly watches Netflix, (we all do), we might assume all content to be original. Netflix “original” as it is dubbed, is not always the case.
An example of this is ‘Peaky Blinders’ starring the likes of Cillian Murphy (an underrated actor with a breakout performance in Breakfast on Pluto) and Tom Hardy. But guess what? The show is not available on BBC US.
Similarly, ‘Titans’ premiered on DC Universe (DC’s own streaming service) which is exclusive to the audience in the US. It wasn’t until January 2019, the show was made accessible to audiences worldwide.
What happens is Netflix purchases the right to broadcast the content via its platform. According to one study, less than 10% of the content currently streaming on Netflix is original.
Top-billed shows such as ‘House of Cards’, ‘Ozark’ and ‘Crown’ are paid for (production and licensing fees) by Netflix to the network AKA actual creators of content.
Before 2013, Netflix completely relied on the licensed content from big production houses including Warner Bros., Disney (soon launching their version of the service) and Universal.
Netflix Subscriber Growth Likely to Cover Negative Cash Flow Or is it?
From the above, it can be safely said that Netflix is burning heavy cash to acquire licenses and this burn is expected to peak towards this year’s close.
Producing originals by Netflix is the latest phenomenon. There were times where studios developed shows specifically for Netflix so they could be licensed.
Hadn’t it been for ‘House of Cards’ and ‘Orange Is the New Black’ which quickly gained traction, Netflix may have never decided to up-the-ante.
In the year 2018, Netflix is stated to have spent $12 billion in both purchasing rights and producing its own content. In 2019, the expenditure is going to climb to $15 billion.
The marketing budget is equally impressive from Netflix especially in the wake of the new season of ‘Stranger Things’. $2.9 billion are to be further spent on marketing, in addition to the partnerships with consumers brands for merchandising purposes.
‘Stranger Things 3’ released this past week – the Fourth of July included in its campaign T-shirts, collectibles, Burger King Whoppers, retro Cola cans, pool floats, Eggo waffle packages with branded ice cream cartons and cakes at Baskin Robbins, etc.
Of course, Netflix earns in the form of licensing fees from these brands. Moreover, garners visibility and reach for its content, in this case, ‘Stranger Things’ which became an instant hit with the fans when it came out a few years back.
Subscriber count and previous hike in pricing will aim to bring down the cash outflow, at least that’s the idea at Netflix HQ. However, it is difficult to comment on whether or not subscriber growth is due to the streaming giant’s original content or the licensed one.
The reason why is because Netflix does not release viewership data for movies and shows currently available on the platform. Research analysts predict $20.2 billion in revenue to be posted by Netflix at the end of 2019.
To Wrap it Up
Come to think of it, the so-called originals aren’t Netflix’s own just that rights to streaming have been secured. Competition from other streaming services such as Disney, NBCUniversal, and WarnerMedia is looming large over Netflix.
No wonder why Netflix is pulling out all stops in terms of both, expenditure and reach through massive advertising.
For instance, Comcast has secured the rights to wildly popular ‘The Office’. Netflix will no longer own rights to the show which is presently the most-watched show on Netflix and will instead be available on NBC’s streaming platform from 2021 onward.
Check out this data from Nielsen and Pachter.
It can be seen from the data above, out of the top 20 most-watched shows on Netflix hailed as “originals”, only one is an actual original i.e. ‘Orange Is the New Black’.
Disney has already decided to pull all its content from Netflix once Disney+ hits the US on November 12, 2019. This means the reign of all the Disney animated, as well as MCU, flicks on Netflix will be over.
Netflix originals have largely underperformed as opposed to “originals”. With fierce spending, rival threat and cash burn out, how things are going to pan out for Netflix, only time will tell.
If originals get taken down one by one, will subscribers want to stick around? Stranger things are happening with no El (Eleven) in view.