• by Atul Patel , April 10, 2013

There have been a lot of headlines in the past year about how streaming publishers are embarking on more original programming projects. In the era of content democratization, these publishers are embracing original content for its potential to generate audience loyalty for their own channels. Netflix’s “House of Cards” series starring Kevin Spacey is currently the most-streamed piece of content in the U.S and in 40 other countries.

 Beyond loyalty, original programming can keep viewers on a publisher’s channels longer and encourage social sharing. Combine this with the fact that the number of hours Americans are watching online video is continuing to climb, and you’ll start to wonder why more online publishers aren’t doing this.

Americans averaged about seven hours of online video watched per month in 2012, a 37% increase year-over-year, according to Nielsen. Creating or licensing original (or exclusive) content can offer a wealth of opportunities for streaming publishers if they have the financial means and technological capability to make the leap.

In case you haven’t been paying attention, here are just a few online publishers that have made video news lately:

• YouTube announced early last year that it was investing $100 million in original programming. And although YouTube said in November that it will only reinvest in 30% to 40% of its original channels, the initial investment laid the groundwork for several successful channels, i.e., Machinima and Red Bull (remember Felix Baumgartner?), and the launch of YouTube subscription channels.
• AOL launched its AOL On Network (5min+AOL Video) last year, a video platform that brings its entire content library under one roof, including seven new original series, such as Amy Harris’ “Fetching” and “Digital Justice.”
• 86% of Netflix subscribers said having access to “House of Cards” makes them less likely to cancel their subscriptions. The video-streaming platform also announced it will roll out a new season of cult favorite “Arrested Development” on its service in May, as well as “Derek,” a new comedy by Ricky Gervais.
• Hulu introduced its original series “Battleground “last year and is expecting to debut its first animated original series “The Awesomes,” co-created by “Saturday Night Live”’s head writer Seth Meyers, this summer.
• Amazon Studios announced in December that it will develop and publish several original comedy series pilots and six children’s shows on Amazon Instant Video. Excitement is already building for its pilot of “Zombieland.”
• Microsoft is planning to start delivering original programming to its Xbox users by the end of the year, making the media conglomerate the latest contender to throw its hat in the ring.
• Even print magazines are jumping in. Magazine publisher Conde Nast most recently announced its plans to launch video networks based on its Glamour and GQ magazines.

Spend Less, Get More

There are many advantages for publishers who want to tap into original programming. For starters, original content will often be easier to spread across their publishing channels. Instead of having to negotiate licensing with the producers each time publishers want to make it available on their websites, device apps, or IPTV channels, publishers get to make this decision because it’s their content.

Netflix, for example, was spending a significant amount of money acquiring content and paying licensing costs. In 2011 through 2012, Netflix spent $4.8 billion on streaming content that wasn’t its own. By introducing original programming, Netflix is able to spend less on some of its content -- the price tag for “House of Cards” is estimated at between $74 million to $100 million -- and attract more subscribers exclusively for its own shows. And by continuing to add successful original programming to its lineup, partnership breakups, like the much buzzed-about Starz, A&E departures) can be less painful.

Original programming also helps streaming publishers make their product offering stand out from competitors.

Capturing audience loyalty

There has been a lot of talk about how Netflix audiences binge-viewed "House of Cards," getting "hooked and watch[ing] episode after episode" in one sitting, according to Netflix CEO Reed Hastings. And once an online publisher hooks a viewer with its content, the audience is more likely to further explore other content in its library, a behavior that can be further encouraged by Netflix’s and Hulu’s recommended videos section.

Although it’s too early to tell how many new subscribers and how much revenue Netflix will generate from its original programming lineup, its strategists must know they are onto something successful, with rollouts for two more original series: Eli Roth’s “Hemlock Grove,” scheduled for release in April and “Sense8, a Wachowskis siblings project, slated for 2014.

Of course, this isn’t to say that Netflix or any of these online publishers should change their strategies and promote only their own content. Audiences want a lot of content, and they want to get as much of it as possible from the channels they use every day. It’s vital for publishers to syndicate content from as many producers as possible because at the end of the day, it will be the breadth of publishers’ libraries that will keep audiences coming back,.

 And, while this speaks to Netflix, Hulu, and Amazon, this topic is equally relevant for print publishers like Meredith, Conde Nast and Time, and large Internet brands like Yahoo, MSN,Spin Media, and everyone in between.