Subscription giant Netflix is set to double its original content catalogue as a means to fuel its future growth. Can the company continue creating magic on the ‘small’ screen? Shashank Venkat finds out
Netflix is undoubtedly the leader of the subscription streaming pack, but of late, it is getting stiff competition from Amazon Prime Video and Hulu, in addition to the looming threat of big bang streaming services from Disney
, Facebook and Walmart
which are expected to hit the market soon. Amidst an increasingly crowded subscription video-on-demand (SVOD) space, combined with a gradual saturation in subscriber growth in the US
and other endemic problems of the industry such as password sharing
, subscription fatigue
and subscriber churn
, Netflix has its job cut out if it wants to retain its pole position. It turns out that the company might be looking at the most obvious answer - content!
According to a new study by Ampere Analysis
, Netflix has 250 originals lined up, which will more than double the current number of originals (229) in its catalogue. Netflix has always been known to spend big on its original content with an estimated $8 billion to be spent this year
. In addition, 85% of all new spend will go towards original shows, films and other productions. According to the study, Netflix will focus more on sci-fi and comedy shows to appeal to younger audiences.
The shift towards originals is quite understandable. Netflix has publicly stated that it wants to own 50% of the content on its platform. This reduces the dependency on other production studios and media companies which are either launching their own subscription streaming services or are growing increasingly wary of Netflix cannibalising their content. The global success it has tasted with its original shows such as Narcos, Okja and Sacred Games is further testimony that the service is on the right track. Owning the content also gives the streaming giant complete control over international licensing rights, which can be quite tricky to manage at times.
Moreover, Netflix also acquired comic book publisher Millarworld
last year which will give it access to a lot of content properties for its original shows. Millarworld is home to some popular franchises and Netflix will start taking advantage of this strategic asset for its originals soon.
Wall Street has often criticised Netflix for its negative cash flow, but the company has been taking steps to rake in additional revenues. Recently, there were reports about Netflix testing a new ultra-tier subscription streaming plan
which gives loyal users access to more features. In addition, it is also looking at ways to bypass iTunes
and redirect users to subscribe via their own app or web version. This will help the company save on the 30% cut it pays to Apple for the first user subscription and 15% on renewals. Netflix can also further monetise its content through merchandising, a concept it has already tested with hit show ‘Stranger Things’. The company will need all these dollars to refuel its content engine.
And it’s not just Netflix which has pegged its future growth on original content. Arch rival Amazon, which houses 105 originals, is also set to double its content. Out of the originals commissioned, Amazon Prime Video is set to focus more on dramas, with 29% of original content belonging to the genre, the study revealed.
While the push towards original content is undoubtedly the way to go, the investment carries a high risk of failure. Since it is a creative medium, it can often be hard to identify a show or script that will resonate with the audience. And if the audience doesn’t like the content on offer, they can very easily subscribe to competitors instead. That being said, Netflix has an enviable track record of original content, and it famously leverages data analytics to predict trends
and create shows. In fact, one of the key reasons for its success is also its continued emphasis on improving technology - be it seamless subscription billing
, in-flight streaming
or offline downloads.
Will Netflix’s investment in original content continue to pay off in the long run? Or will it cede ground to the tech giants waiting to cast their subscription net? We will be keeping a close watch!
(Image credit: Nodstrum)