Netflix is notoriously tight-lipped when it comes to its viewership data, guarding its audience ratings like a mother bear protecting her cub. And since the streamer constantly disputes third-party measurements, including Nielsen, it’s impossible to know how accurate the rare viewership data the company publicly trumpets really is. For example, a Recode study revealed that classic hits such as The Office, Friends and Parks and Recreation are among Netflix’s most-watched shows. Yet none of them appeared on the streamer’s top 10 most-binged shows list, which Netflix released itself.
With Disney, WarnerMedia and NBCUniversal all launching standalone streaming services by 2020, Netflix is expected to lose a significant chunk of its licensed library once its existing contracts expire. That includes Marvel and Star Wars content as well as the aforementioned hit series (The Office will remain on Netflix until 2021). While original programming drives subscription growth in the streaming industry, 72 percent of Netflix’s watched minutes was devoted to library programming, or reruns, according to Nielsen data provided to The Wall Street Journal. In fact, Disney, WarnerMedia and NBCUniversal supply Netflix with 40 percent of its viewing minutes. According to the data, eight of the streamer’s 10 most-watched series are non-originals.
How is Netflix supposed to replace that kind of engagement?
Disney CEO Bob Iger revealed on the company’s February earnings call that he’s expecting a year-over-year revenue loss of $150 million as the Magic Kingdom reroutes its licensed content to Disney+. WarnerMedia held immense leverage over Netflix with its Friends deal, which was set to expire at the end of 2018, eventually drawing a $100 million payment from the streamer for 2019 rights. But WarnerMedia exec Kevin Reilly noted earlier this year that he expects the company’s “crown jewels” to eventually be in-house exclusives. Per the outlet, NBCU is still reportedly debating its licensing versus exclusive approach internally. Regardless, Netflix will have to pay a premium to continue housing some of its most popular titles.
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Netflix CEO Reed Hastings has publicly embraced the challenge, noting the streamer’s $1.4 billion monthly content expenditures and touting the company’s original development slate. The platform is investing heavily in both film—90 movies per year, including $200 million blockbusters—and television, with several high-profile home-run swings on the horizon. But despite Netflix’s robust first-quarter growth, in which it added a record 9.6 million new customers, some observers still belief the streamer might have already peaked. While that may be a premature conclusion, there’s no debate that non-originals play an important role in Netflix’s baseline success—at least for now.
“Looking at overall watch time skews towards titles with many seasons,” Netflix said in a statement. “Most Netflix originals have three or fewer seasons at most. It’s why we focus on the individual shows or films members watch, as opposed to how much time they spend on one series versus another. And if you look at most watched titles, Netflix originals accounted for 10 out of 10 in the last quarter, or 21 out of the top 25.”
The streamer’s flagship series, Stranger Things, was watched for 27.6 billion minutes over a 12-month span that ended last July, per WSJ. The Office drew 45.8 billion minutes-watched in the same frame, while Friends earned 31.8 billion. While you can absolutely argue that’s a skewed stat given the disparity in total episode count, hours and minutes watched has become an increasingly key metric in the streaming industry. Some would argue that previous hits like Friends and The Office have depreciating values, as younger viewers catch up and the series eventually age out of dominant relevance. But for now they remain an integral piece of Netflix’s pie.
As traditional media opts for verticalization amid the decline of pay-TV, Netflix’s originals will take on greater responsibility for maintaining engagement. But with so many streamers popping up and vying for zeitgeist-capturing content, it will grow increasingly more difficult to unearth options that cut through the clutter.