Survey of Netflix users’ favourite shows demonstrates the power of its original content
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Survey of Netflix users’ favourite shows demonstrates the power of its original content

Everyone knows that streaming video on demand (SVOD) market leader Netflix is synonymous with great original content. From its first foray into making its own TV shows (House of Cards), through numerous blockbuster titles (Orange is the New Black, Black Mirror, Grace and Frankie), to recent successes (Stranger Things, The Chilling Tales of Sabrina), fans have been enthusiastic consumers. There’re two obvious benefits here: first, if you can create your own great content, it’s more cost-efficient than licensing it. And second (and more importantly) original content gives you an exclusive edge: if viewers are desperate to see the next series of Stranger Things, they have to become Netflix customers – for that small demographic of super-fans, you essentially have no competition.

Netflix’s share price has appreciated by an incredible 43% so far this year!

netflix g 120409

Source: Yahoo Finance

Understandably, given the advantage Netflix has gained over its competitors, this strategy is very popular with investors – but there is one down side. Netflix doesn’t release viewership figures for its shows.

Now, there are plenty of good arguments for keeping that data secret – some of them, for example, hinge on creative quality. Shows like Arrested Development weren’t popular enough to stay alive on network TV, despite widespread critical acclaim and a devoted (if not particularly big) following of fans. If you publish viewership numbers and shows like that underperform, the possibility emerges that shareholders will start calling for their cancellation. However, in the wider context of winning awards, capturing niche audiences, and developing a reputation for quality (all of which attract both creative talent and audiences) these “underperforming” shows could be worth much more than viewership numbers suggest.

Despite this, it still sucks not being able to see how many people watched Daredevil. Because, ultimately, in most cases, viewership figures do means something. And they’re a loose but broadly effective way to measure whether the company is getting a decent return on its (considerable) investment in content.

Well, we still don’t have those figures, but we do have the next best thing: a breakdown of the most popular shows on Netflix. These findings were gathered by MoffettNathanson, which polled 500 Americans from “a demographically representative sample”. The firm says it shows how strong Netflix has become in content, adding that “the breadth and variety of the answers point to the deep value of a diverse library.”

netflix shows 120419

Source: Variety

From the chart above, it’s clear that Netflix Originals are the most popular programs on the platform. That’s great news, given that the next season of Stranger Things will be out this summer! However, syndicated content, like Friends, The Office, and more, remains popular too. Can we be sure that Netflix won’t lose access to this content one way or another? MoffettNathanson thinks so: “We continue to believe that Netflix will be able to source content from Hollywood’s studios because few have embraced Disney’s strategy.”

In other words, Netflix has exclusive access to is audience’s favourite content (because it creates it), and it’s not likely that syndicating other popular content is going to be a problem. We still don’t have any hard viewership figures… but it’s hard to imagine a more positive outcome for the streaming giant.

Disclosure
Dominion holds Netflix in its Global Trends Ecommerce Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.