Ever since it launched its streaming platform in 2007, Netflix has continued to innovate in terms of content and distribution. It’s on the content side, though, where Netflix has really excelled, building a massive library of movies and classic TV shows that has made it one of the leading layers in the streaming content space.
One key element in this content strategy has been the creation of the Netflix Originals programming initiative, which formally launched in 2013 with “House of Cards.” Since that time, Netflix has launched 26 other Originals, in categories ranging from drama and comedy to kids’ programming and documentaries. Some of the most popular Netflix Originals include “Orange is the New Black” (said to be the most-watched Netflix Original), “Narcos,” “Daredevil,” “Marco Polo” and “Unbreakable Kimmy Schmidt.”
Each Netflix Original is content produced, co-produced or distributed by Netflix exclusively on its own platform. The important part in that is the “exclusivity” of Netflix Originals. Simply put, if you want to watch “House of Cards” or “Orange is the New Black,” the only place you can watch them is via Netflix. And that means you have to sign up as a Netflix subscriber.
What’s extraordinary is the amount of Originals content that Netflix now produces on an annual basis. In 2013, the company produced about 100 hours of original programming. In 2016, that figure could reach 600 hours.
Netflix vs. HBO
This leads to the natural question: Why exactly is Netflix producing all this content at such a rapid rate? The easy answer, say analysts, is that Netflix is trying to become HBO faster than HBO can become Netflix. That is the fundamental dynamic going on in the streaming space.
Before Netflix Originals, the only way Netflix could get content to stream to consumers was to license content from movie or TV studios. And that’s very expensive. So as fast as Netflix signed up new subscribers, it was simply sending all that money back to the original content producers. By investing in Netflix Originals, Netflix could reduce all those licensing costs. And, moreover, it could change the way consumers viewed the streaming service.
In many ways, Netflix has become similar to HBO. Just as some people only sign up for HBO to watch a single show – such as “Sex and the City” or “Game of Thrones” – some people now sign up to Netflix only to watch a single show, such as “Orange is the New Black.” If the content is good enough, it becomes part of the overall pop culture, and that means people are talking about constantly. Suddenly, you’re not in the “in” crowd if you don’t know what happened to Kevin Spacey last night on “House of Cards.” So you sign up for Netflix.
That’s exactly the opposite problem faced by HBO, which is known for creating some of the best TV content in the entertainment world. Everything HBO produces seems to turn to gold – especially if it airs on Sunday night. “Game of Thrones” is just the most recent example. But HBO is dependent on the major cable and satellite providers for distribution. For the most part, people can’t watch HBO if they are not a cable or satellite subscriber.
So HBO has been working furiously on ways to “unbundle” itself from traditional cable TV – much like Netflix. That’s why it’s such a big deal when streaming services are able to offer HBO even if you don’t have a cable TV subscription – it means that HBO is further breaking its dependence on the big cable providers, who can no longer offer HBO as some sort of “premium” enticement to get people to sign up for an expensive cable package.
Netflix vs. the cable TV providers
Another big consideration to keep in mind is how widely Netflix is hedging its bets in terms of content. It’s easy to think of Netflix as only a place for new dramas. But there are plenty of other types of content included within the Netflix Originals. For example, “BoJack Horseman” is an animated sitcom series about a former sitcom star that happens to be a horse. “Marco Polo” was an epic period drama that ranks as one of the most expensive TV series ever produced. “Daredevil” is part of a five-season deal with Marvel Television that also includes “Jessica Jones” for superhero TV content from Marvel.
In Fall 2016, Deutsche Bank did a comprehensive study of Netflix content and found that Netflix will release an estimated 126 original series or films in 2016, more than any other network or cable channel. If you think about that, it’s a staggering total. Netflix is trying to revolutionize the way we think about streaming – it’s not just about ordering one movie every weekend, it’s about making Netflix a nightly experience. The same way you might watch TV on NBC, ABC or FOX every night of the week, you can now watch Netflix – the programming lineup is that deep.
There’s a business reason behind this move as well. Instead of subscribing to cable, you now might subscribe to Netflix. Even if you are tempted to quit your Netflix subscription, “there are just too many good shows on.” It’s the reason some people can’t quit cable – they can’t bear the thought of losing ESPN and sports coverage, or CNN and news coverage. By constantly announcing new Netflix Originals, Netflix hopes to keep people subscribing to Netflix for longer. If you know that a new season of your favorite Netflix show is going to be available in three months, are you going to quit now – or wait for another three months?
Netflix vs. Hollywood
Finally, Netflix is changing the relationship between the big film studios and the streaming services. That’s because Netflix is now self-producing content (e.g. “Chelsea” and “The Ranch”) through its Netflix Studios production studios. That means Netflix will not be as dependent on Hollywood studios for licensing content – and it will give them more flexibility in terms of when and where they can stream the content. This is an especially important consideration if you think about Netflix as a global – not just U.S. – streaming service.
Going forward, Netflix will continue to revolutionize the streaming platform. The company will continue to change the way we think about content, distribution and pricing. And the constant supply of new Netflix Originals will continue to position Netflix as more than just a streaming service – it’s also a premium content producer along the lines of an HBO, as well as a network along the lines of an NBC or ABC, filled with lots of shows and programming that can be watched every night of the week.