Netflix Originals Will Be More In Demand Than Licensed Titles By 2019 – Study

Demand for Netflix originals will outpace demand for licensed titles by October 2019, according to new research jointly undertaken by Parrot Analytics and Kagan, the media research unit of S&P Global Market Intelligence.

Parrot, a TV analytics firm, and Kagan surveyed overall consumer demand for television content on Netflix, Hulu, HBO Now, Showtime, and Starz. Their report compared the sum of U.S. demand for both Netflix original series and the licensed titles available on the U.S. Netflix service each month. During the July 2017 to June 2018 period, the demand share for Netflix originals grew an average of 1% each month and the streaming service’s reliance on licensed content dropped by 10.9%.

Based on this 12 months of data, the report forecasts that Netflix will generate 50% of U.S. audience content demand with its own original content beginning in October 2019.

Netflix executives have long sought to flip the model they started with 21 years ago, of acquiring outside content and using data to perfect delivery to customers. The company has poured $13 billion into programming this year alone as a way of boosting its own content as a hedge against rival services.

Well-established suppliers like Disney and Warner Bros., whose shows are among the most streamed overall on Netflix, have recently announced plans to pull back content as they favor their own forthcoming streaming services. The tug of war played out around the 1990s sitcom Friends, which recently was renewed by Netflix in a non-exclusive license worth $100 million.

The Parrot-Kagan report found that for HBO Now, Showtime and Starz, new content corresponding with what airs on their linear channels tends to drive most demand. However, the report noted, “the respective back catalog of each VOD platform continues to play an important role, indicating that older titles likely remain an important driver of subscriber loyalty.” Netflix skeptics who foresee disaster when (if?) Friends, Grey’s Anatomy and The Office leave the service are likely to cite that conclusion as evidence for their case.

“The future for the industry is likely to be even more crowded and the winners are still unknown,” said Deana Myers, Research Director, S&P Global Market Intelligence. “We estimate the overall U.S. SVOD industry has many strong years of growth in its future, particularly as competition from Disney and Apple could impact the market.”

Other new entrants to the online video space, like Facebook Watch, YouTube and DC Universe, are also investing heavily in originals and acquired content. At the same time, content spending for Netflix, Amazon and Hulu is expected to continue to grow at double-digit rates.