Why Netflix’s Strategy for Winning the Streaming Wars Can’t Be Replicated
Why Netflix’s Strategy for Winning the Streaming Wars Can’t Be Replicated
If less than 5% of all streaming titles account for 70% of all viewing on streaming services, how important is having a huge library?
It can be hard to gauge the true effect of streaming content cuts. They often lead to a public outcry from fans of the titles being removed, but removals are not usually followed by a large spike in cancelations for streamers. Most services are trying to trim underperforming titles from their catalogs these days, though data from Reelgood indicates that all streaming platforms, with the exception of Prime Video, have grown their libraries since 2021.
- The 1,000 biggest streaming titles in the United States account for 70% of viewing.
- Having a large library is key for a streamer like Netflix, which has built a reputation on having a wide content offering.
- Smaller streaming libraries are viable, especially if streamers have a free ad-supported platform like Tubi or Pluto TV as a corporate partner.
What’s Good for Netflix…
Having a lumbering streaming library packed full of licensed titles and library shows certainly works for Netflix. Its global subscriber count of 247.15 million subscribers attests to that, as does the success of acquired titles like “Suits,” which has had nothing short of a historic renaissance since becoming available on Netflix in June.
Cord-cutters aren’t hurting for choice these days, as there are more than 2 million titles available to stream around the globe, spread across various streaming platforms. The status quo used to be exclusivity; the best way to lure new customers to a streaming platform was to have content they couldn’t stream anywhere else, at least according to established dogma in the late 2010s.
But according to Mitch Metcalf, head of media consulting firm MEI who spoke to Variety recently, American audiences are drawn to a relatively small subset of titles. Around 1,000 titles account for 70% of all viewing time on streaming services measured by Nielsen, according to Metcalf, which shows why streaming platform owners are more willing to enter into licensing deals for familiar popular titles and leave the siloed gardens of streaming exclusivity behind. Platforms that have the rights to one of those in-demand titles need to put them in front of as many eyes as possible, even if it means a competitor might also benefit from their popularity.
Netflix is uniquely positioned to take advantage of this trend because of the reputation it has built as a ubiquitous streaming platform with a massive library over the years. It has licensing deals in place with most of the top media outlets, and recently agreed to a new deal with Disney that will see 14 Disney-owned shows stream nonexclusively on the platform going forward. Netflix has found success with a large and varied streaming library, but its triumph will be hard to copy for its competitors.
Will Other Streamers Try to Copy Netflix’s Success?
The problem for platforms that are thinking of trying to emulate Netflix’s success is that none have been as successful at building subscriber scale, at least thus far. Netflix’s position as the streamer that pulls licensed shows in but does not license any of its originals to other platforms is made possible by its huge customer base and steady profitability, which no other streamer can match. Licensing fees figure to be a key part of Disney’s streaming profitability equation next year, but since Netflix is already making a profit, why would it license its originals to others?
Smaller streaming platforms do not have to steal Netflix’s strategies in order to have success, nor is it wise that they try. Instead, they should focus on building a core of brands that users associate with their platform, and license that content on a limited basis. That’s exactly what AMC did earlier this year,licensing several titles to Max, but ensuring that some seasons of those shows remained exclusive to AMC streamers. Those shows saw a rise in popularity on AMC platforms during the licensing deal, and AMC streamers grew by 100,000 subscribers during the third quarter of 2023, when the deal first took hold.
Media companies can even skip the licensing step if they’ve got a free ad-supported streaming platform in-house, as well. Using these platforms as a repository for titles that could have been licensed to the competition instead, or they can be used to acquire more obscure shows and movies for smaller licensing fees and make that money back through ad revenues. For example, Tubi allows Fox to use Fox Nation for more specifically curated lifestyle and entertainment shows while using the free ad-supported streamer to house generalized entertainment.
The company also gets to collect a hefty licensing fee from Disney, as next-day streams of Fox primetime shows that are too expensive to be sent to a free streaming service are instead housed on Hulu. Fox is perhaps the ultimate example of a company finding streaming success, despite not having an enormous library of exclusive content that keeps users unable to cancel their subscription.
Although many streaming platforms seem to be following the same basic formula to try and make themselves profitable, there are different ways for subscription video services to be successful. Netflix has a big enough customer base to have success in trying to be all things to all people, but smaller platforms can use licensing and free streaming channels to achieve success as well.
Hulu
Hulu is a video streaming service that gives access to thousands of full seasons of exclusive series, hit movies, kids shows, and Hulu Originals like “Only Murders in the Building,” and “The Handmaid’s Tale.”