Commentary

Netflix May Become All-Original Streaming Service

Think about five or 10 years from now -- all new streaming services will have a wealth of product on their pay TV services. But not just any programming -- all originals.

Somewhat surprising to some, Netflix might get there ahead of others. (It's just not exactly sure when.)

Speaking at a industry event at the Paley Center for Media's International Council Summit in New York, Ted Sarandos, chief content officer of Netflix, said a total original service is coming:

"There is a lot of viewing that comes from licensed content from other people, because there is a lot of it. And for a while, it was all we had," he said. Big, long-running shows “Friends” and “The Office” have hundreds of episodes. But having all originals? That is coming. "I think one way or the other, we end up there."

Concerning the crazy race to spend multi-billions on all video streaming services, you can imagine all companies will get to the same spot. (Profitability is another story.)

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Perhaps making this easier for Netflix is the obvious. It goes to consumers directly -- through an app and a seemingly unlimited number of distribution points. Traditional pay TV distributors -- cable, satellite, and telco -- have had only so much bandwidth for TV channels, and in turn, for programming. (More of that is expected with future 5G technology.)

All this would fly in the face of conventional wisdom -- that too many original TV shows (perhaps 500 or so) could hurt the business. The argument here is that not all can succeed. Many will fail and lose billions of dollars in a glutted marketplace filled with too much promotional noise.

Still, Netflix’s growth doesn’t seem to be slowing down. Company executives say it could have 1,500 hours of original TV shows and movies on its platform this year. Last year, Ampere Analysis said 51% of all streaming U.S. releases available were Netflix originals.

Production/programming “churn” may be somewhat of a wrinkle here. This is where Netflix has shortened the lifespan of new, original TV programming to perhaps a two- or three-year frame.

We don’t know how this compares to traditional broadcast networks, which can also include expensive one-off pilots that go nowhere.

At some point, the cost of TV shows would need to drop -- or consumer pricing climb -- to make this financial equation work.

Sony Playstation Vue recently pulled its effort to maintain a live, linear TV network service. Did rising costs around original programming -- through an increasing number of on-demand services, or in taking on existing platforms -- cause this?

All this yields the possibility of a coming shakeout. Who will be next?

3 comments about "Netflix May Become All-Original Streaming Service".
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  1. Ed Papazian from Media Dynamics Inc, November 19, 2019 at 10:36 a.m.

    As you noted, Wayne, all original content might be too much of a good thing. Indeed, most of the licensed shows that accounted for so much of Netflix usage but are being withdrawn by their owners, consisted of former hit TV series. Which is why they garnered so much usage on Netflix. These were top quality programs which attracted many new fans in their recycled mode.Going the all-original route---including a huge percentage of shows designed for foreign consumption----is a very costly operation and a risky option as many of the shows--or movies---will simply not be very good, hence, not very attractive to potential subs.

  2. John Grono from GAP Research, November 19, 2019 at 4:06 p.m.

    The question is ... what is 'original' and when is 'original' not original?

    Take NetFlix's 1,500 hours of original content.   Does that refer to their entire slate?   Netflix has been around for 20+ years, but it wasn't until 2011 that started acquiring original content.

    Does that mean that the 1,500 hours of original content is the nett result of 8 years of acquisition?   That's around 200 hours per year - a fine performance.

    But from a consumers perspective that is around a half-hour of original content per day.   If consumers are THAT wedded to original content then that could loom as a big business issue for any streamer or broadcaster (which is why broadcasters carry so much news and sport - it is all original).   Do they REALLY turn their back on content that was 'original' a week, or a month, or a year, or a decade ago?

    'Original' to the viewer means that they haven't seen it before.   Plus, just because they've seen it doesn't mean they won't watch it again (I can watch Peter Sellers in 'The Party' time and time again ... or The Marx Brothers 'Duck Soup ... just as two examples.)

    I contend that most viewers are more focussed on quality content - old or new, original or third-party, never-seen or seen-before.   Two laments that are often heard are ... not that show again, and, .... that's rubbish turn it off.

    So focussing on 'all original' (depending on how you define it) could be a ricky strategy.

  3. Frank Zazza from Programmatic Product Placements, November 20, 2019 at 9:51 a.m.

     

    At some point someone has to pay for this "original content."  There are only three options.  Subscriptions, without raising the price to obscenity.  Advertising which is counter intuitive for what Netflix viewers have paid for. Or, the next generation of product placement where brands spend big for co-producing.

    I'm impressed with Netflix producing "The Irishman" actually, can't wait to watch it. However, being realistic, can Netflix  continue producing this quality of original programming without aligning itself with any of these  options...?

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