Netflix swamped its platform with a record amount of original content in third quarter
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Netflix swamped its platform with a record amount of original content in third quarter

Streaming Video on Demand (SVOD) market leader Netflix reports third quarter earnings next week – and some observers think that the amount of original content it’s debuted over the last three months bodes well. The company has pursued an “exclusive content” strategy for some time, and it’s pretty easy to understand: buy, or create, brilliant content, and make sure it’s only available on your platform. Viewers are then incentivised to choose Netflix over its competitors. The trick here, of course, is making sure you have the biggest and best library of shows and films. That’s why Netflix is spending billions of dollars every few months on new programming.

Netflix’s share price has appreciated by 70% so far this year

graph 1210 netflix

SOURCE: Yahoo Finance

In the third quarter of 2018, which ended on September 30, Netflix debuted an incredible 676 hours of original content. That is more than double the amount it published in the third quarter of 2017, demonstrating that it’s walking the walk when it comes to programming. This, many people believe, is probably a good thing: the company’s original shows have consistently been a hit with viewers and critics alike, and are a driver of growth.

Some of the bigger releases over the last three months have been new seasons of Orange is the New Black, Marvel’s Iron Fist, Bojack Horseman, and Big Mouth, as well as new shows like psychological thriller Maniac (starring Jonah Hill and Emma Stone), and a slew of comedy specials from comedians including Jim Jeffries and Joe Rogan. According to Cowen & Co.’s analyst team, led by John Blackledge, the company’s “increasingly robust content slate” suggests that Netflix will hit its forecast number of new streaming subscriptions (in the second quarter, it fell short).

New content alone isn’t enough, of course. Some observers have raised concerns that the sheer volume of programming Netflix releases means that some of its original shows fly under the radar. If true, that would be a problem: the company should be getting value for money from its content push. Ted Sarandos, Netflix’s chief content officer, wants to put that myth to bed. He recently told listeners: “the notion that things get ‘lost’ on Netflix is silly. Things get found on Netflix. People say ‘you have so much to watch.’ Yeah, but it’s not all for you.” The way the company puts the right shows in front of the right people is its algorithmic content-recommendation engine. Netflix spent a huge amount of time and money on getting that engine right, and all the signs suggest it continues to push programming where it wants to go. Next week, we’ll see if it paid off over the last three months.

Disclosure

Dominion holds Netflix in its Global Trends Ecommerce Fund.


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