One reason Netflix continues to thrive, aside from spending a significant amount on programming, is that it does not have the same constraints as ad-supported networks.
It does not care about artificially constructed age groups like adults 18-49 or 25-54. A 60-year-old woman has just as much
value to Netflix as a 25-year-old man.
Netflix wants “Longmire” and “Grace and Frankie” to appeal to different viewers than “Orange is the New Black,” “Daredevil,” or “Black Mirror.” Reach matters much more to Netflix than average ratings.
The network also doesn’t need to worry about audience flow from one hour to the next, or whether a given show fits into a nightly lineup.
Another factor that separates Netflix from ad-supported networks: It doesn’t need to have one season come right after another – it can take its time. For example, the excellent “Jessica Jones” debuted in 2015, and its highly anticipated second season is slated for March 2018.
Netflix is not just sitting on its laurels, as some of its best series debuted in just the past two seasons, including dramas “The Crown,” “13 Reasons Why,” “Ozark,” and “Mindhunter,” comedies like “GLOW,” and Marvel’s “Luke Cage,” “The Defenders,” and “The Punisher.”
The heavily buzzed season 2 debut of “Stranger Things” (its most popular series) once again showed that original content rules, and why Netflix remains unchallenged by its competitors.
While Hulu does have the Emmy-winning “A Handmaid’s Tale,” and the new, well-received “Marvel’s Runaways,” it has focused more on reruns from the libraries of its major owners, Disney (ABC), Twenty First Century Fox (FOX), and Comcast (NBC). While nice to have, off-network repeats do not significantly drive subscribers the way original scripted series do.
Amazon Prime is a different animal from both Netflix and Hulu. The bulk of its subscribers get it for shopping, and see the video service as a bonus (although Clearleap has reported that roughly 75% of subscribers say they do watch video on the platform). It also offers numerous a la carte channels covering a variety of genres. Amazon Prime Video has a few high-profile series, most notably,“Transparent,” “The Man in the High Castle,” the unscripted “The Grand Tour,” and “The Marvelous Mrs. Maisel.” Amazon does have global reach, and is looking for its own “Game of Thrones”-type series.
So, while both Amazon Prime Video and Hulu do have a few major successful series, neither has anywhere near the volume of high-quality programming as Netflix. Netflix has reportedly spent a remarkable $7 billion for content in 2017 and expects to spend $8 billion next year (with the reported goal of increasing its annual original content from the current 25% to 50% by 2020). Amazon Prime and Hulu are reportedly spending $4.5 billion, and $2.5 billion on content, respectively.
It should also be noted that more than 40% of the country does not subscribe to subscription video-on-demand.
There is still plenty of room for CBS All Access, the upcoming Disney streaming services, and others, but they won’t have much impact on Netflix for the foreseeable future. They could have a major impact on cable however, as subscriptions to several of these streaming services will give many viewers everything they want to watch (at a lower overall cost).