Netflix to License Older Content to Draw Viewers
By Movieguide® Contributor
As competition among streaming platforms remains fierce, Netflix plans to continue drawing an audience by licensing older shows and movies rather than relying solely on original content.
During its third-quarter financial report earlier this month, Netflix told shareholders that the company “may have increased opportunities” to license more content in the future.
“We believe this will deliver additional value for our members…as well as for our rights holders who benefit from increased awareness and revenue that Netflix delivers, in addition to the new life that success on Netflix can drive,” the company said.
This new-life phenomenon has been seen many times as older shows shoot to the top of pop culture solely due to their easy access on Netflix. THE OFFICE and FRIENDS are older examples of shows that experienced this boom, with SUITS being the latest addition.
Netflix co-CEO Ted Sarandos made special note of SUITS, sharing that the show garnered 1 billion viewing hours between June 19 and September 10. He also lauded that SUITS was watched by more people over those 12 weeks than any other movie or TV show on streaming.
“I think SUITS is a great example of the impact of the Netflix effect that we can have because of our distribution footprint and our recommendation system,” Sarandos said. “We were able to take SUITS, which had played on cable and had played on other streaming services, and pop it right into the center of the culture in a huge way, not just in the U.S. but all over the world.”
This strategy helps Netflix differentiate itself from key competitors, such as Disney+ and Apple TV+, who rely on original content to drive the platform. By acquiring content that has already been proven, Netflix can save costs on high-budget shows that end up with little to no audience.
Cost-saving practices will become increasingly important in the coming years as the recently resolved writers’ strike and ongoing actors’ strike negotiations have required streaming services to pay better residuals. Rather than paying a large up-front cost for production along with more expensive residuals, it could prove to be better business to acquire shows and pay a less expensive acquisition cost along with the residual pay.
Movieguide® previously reported on Netflix’s business strategy:
Netflix recently revealed their future plans and the innovations they hope will keep them as the most popular streaming service available.
After years of uncontrolled growth, Netflix was hit with reality last year when they posted a loss in subscribers during Q1, the first time they had seen a drop in users in over a decade. Since then, the company has been restructuring itself to focus on maximizing profits, rather than subscribers.
The most notable change in the company came when Netflix announced they would be cracking down on password sharing in March of last year. This change came with the introduction of an ad-supported subscription tier, in an effort to provide a cheaper option for users who had previously been using someone else’s account. This crackdown has been tested by Netflix in multiple markets and is planned to be fully rolled out by June of this year.
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