Should Netflix Reconsider its Position on Licensing Shows to Other Streamers?
By every conceivable metric, Netflix is off to a better start in 2023 than it was in 2022. The service reported having 230.75 million global users at the end of 2022, and is the only major streaming service currently pulling in a profit as the rest of the industry struggles to figure out a viable path toward net financial gains.
The world’s largest streamer executed a big pivot during the last calendar year, bringing an ad-supported streaming tier from the conceptual stage to a market-ready product in less than seven months. This year’s big initiative at Netflix is to crack down on the 100 million worldwide users that the company estimates are using the service via someone else’s credentials. The company’s plan is due to launch globally sometime in the first quarter of the year.
But what else can Netflix do in 2023 (and beyond) to keep improving its profitability? One avenue that companies like Warner Bros. Discovery have been pursuing is the licensing of popular shows to other media companies for syndication, either on linear networks or free ad-supported TV (FAST) channels. Netflix co-CEO Ted Sarandos said in a recent interview with Bloomberg's Lucas Shaw that content licensing “has never been part” of the Netflix business model, but is that the wisest course of action?
After all, content licensing is a quick way to generate easy cash. Shows that sit and gather dust in the Netflix library might have more value for a FAST provider or other ad-supported streamers, resulting in a hefty licensing fee for Netflix.
Another alternative for Netflix to further monetize its library shows would be with the introduction of its own FAST channels. These would certainly help Netflix increase the amount of “lean-back” viewing that the service sees, which some executives estimate accounts for as much as 80% of TV watching. Netflix has reportedly been considering getting into the FAST game, but launching FAST channels would mean the company misses out on licensing fees, plus it would be on the hook for creating and maintaining those channels financially.
Whether internally or externally, FAST channels — which air episodes in order 24 hours per day — could also help drive viewers to the subscription side of the business if they would like to binge or rewatch shows without having to watch the linear channels around the clock.
If Netflix did change its mind about licensing out its shows and movies to other streamers, it wouldn’t be the first time the company did an abrupt about-face on one of its longstanding policies. In addition to vowing to never introduce ads, the planned efforts to curb password sharing spring to mind, especially for a company that proclaimed as recently as 2019 “love is sharing a password.” The new ad-supported tier also represents a philosophical shift at the company, as some company executives resisted streaming with ads on the service for years.
The only certainty in the world of entertainment is that it’s best not to be too certain about anything. Netflix doesn’t seem to want any part of content licensing currently, but if it becomes a viable way to increase profits, don’t rule anything out for the streaming giant.