In 2011, I wrote my first report on streaming, titled, Netflix is the Best Thing Ever. This was a year before its first original scripted series, Lilyhammer, and two years before the streaming service debuted its first major hit, House of Cards.
We had just subscribed to Netflix, and I thought it had a potentially brilliant model for success and was poised to enjoy tremendous growth. I ended my article with the following:
“So far Netflix hasn't had any impact on our regular television viewing, but it has cut sharply into our pay-per-view movie and DVD viewing. I think it's the first thing that's actually cut into my son's videogame playing. We like the basic platform so much, however, that if and when Netflix does strike more content deals for top TV shows and movies, it will probably have a much bigger impact on our TV viewing -- especially in the summer. The company has the right model, and seems to have hit that rare chord with kids, teens, and their parents.”
There were some initial drawbacks, of course. A lot of the stuff we wanted to watch, the best movies and most current TV shows, were not available. My then 12-year-old son said at the time, “I like Netflix, but it kind of sucks.” I thought this was actually a profound comment that indicated why Netflix had so much potential. If we liked it when it sucked, how would we feel when it no longer sucks?
In 2017, I wrote another article titled, Netflix Still Rules. My then 18-year-old son told me to “tell them it no longer sucks.” By then there were numerous original scripted series my wife, son, and I watched, some together, some by ourselves. Here’s part of what I wrote in that report:
“One reason Netflix continues to grow and thrive, aside from spending a significant amount on programming, is that it does not have the same constraints as ad-supported networks. It does not care about artificially constructed age groups such as adults 18-49 or 25-54. A 60-year-old woman has just as much value to Netflix as a 25-year-old man. Netflix wants Longmire and Grace and Frankie to appeal to different viewers from Orange is the New Black, Daredevil, or Black Mirror. Reach matters much more to Netflix than average ratings. It also doesn’t need to worry about audience flow from one hour to the next or whether a given show fits into a nightly lineup. Another thing that separates Netflix from ad-supported networks is that it doesn’t need to have one season come right after another – it can take its time. For example, Jessica Jones debuted in 2015, and its highly anticipated second season is slated for March 2018.
While both Amazon Prime Video and Hulu do have a few major successful series, neither has anywhere near the volume of high-quality programming as Netflix. Netflix has reportedly spent a remarkable $7 billion for content in 2017 and expects to spend $8 billion in 2018 (with the reported goal of increasing its annual original content from the current 25% to 50% by 2020). Amazon Prime and Hulu are reportedly spending $4.5 billion, and $2.5 billion on content, respectively. It should also be noted that more than 40% of the country does not have any subscription video on demand (SVOD). There is still plenty of room for CBS All Access, the upcoming Disney streaming service, and others, but they won’t have much impact on Netflix for the foreseeable future. They could have a major impact on cable however, as subscriptions to several of these streaming services will give many viewers everything they want to watch (at a lower overall cost).”
As I write this, it has been roughly 80 days since my family has been self-quarantined in our Hoboken, New Jersey apartment. And it has become clearer than ever that Netflix is still the best thing ever.
It’s hard to believe that it was just seven years ago, in February 2013, that Netflix released the first streaming hit, House of Cards (Its first original series, Lilyhammer, debuted a year earlier). It was the first streaming series to receive major Emmy nominations (56 over its six-year run). Since then, Netflix has dropped a string of successful new series every year on its way to drawing more than 180 million subscribers worldwide (roughly 70 million in the U.S.). Being first out of the gate with spending levels that rose from about $3 billion to more than $15 billion per year helped give Netflix a lead in the streaming wars it may never relinquish. During the first three months of 2020, as COVID-19 started to cause people around the world to stay home, Netflix added a record 15.7 million subscribers.
Some of Netflix’s more notable original scripted series include, House of Cards (2013); Orange is the New Black, BoJack Horseman, Peaky Blinders (2014); The Unbreakable Kimmy Schmidt, Grace & Frankie, Narcos, Bloodline, Marvel’s Daredevil and Jessica Jones, Sense8, Master of None (2015); Fuller House, The Ranch, Stranger Things, Black Mirror, The Crown, The OA (2016); Dear White People, GLOW, Ozark, Mindhunter, 13 Reasons Why, Marvel’s The Punisher, Money Heist (2017); Altered Carbon, Lost in Space, The Chilling Adventures of Sabrina, Narcos: Mexico (2018); The Umbrella Academy, Russian Doll, Dead to Me, Sex Education, When They See Us, The Politician, Unbelievable, You, The Witcher (2019); Never Have I Ever, Gentefied, The Stranger, Unorthodox, Locke & Key, Self Made, The English Game, Hollywood, Space Force (2020).
Netflix has also started to air some popular original reality and documentary series, such as Love is Blind, The Circle, Dating Around, Ultimate Beastmaster, Nailed It, American Factory (the first series from Barack and Michelle Obama’s production company), and the mega hit, Tiger King: Murder, Mayhem and Madness.
All of these represent just a small sampling of Netflix’s original programming.
In addition to its high volume of original scripted series, Netflix plans to release around 90 original movies per year (it had 50 in 2017). That’s an extraordinary number – more than three times as many original movies released in theaters by the top two box-office leaders, Disney and Warner Bros., combined. Six original movies ranked among Netflix’s most popular shows of 2019 – Murder Mystery, 6 Underground, The Irishman, Triple Frontier, Extremely Wicked, Shockingly Evil and Vile, and The Highwayman. Two 2020 movies have already become two of its most popular programs of the year. Both are actioners – Extraction (starring Chris Hemsworth) and Spenser Confidential (with Mark Wahlberg). Many more are on the way.
While many of Netflix’s movies are not top tier, some are of the highest quality, as the streamer makes periodic pushes for Oscar gold. Roma debuted in 2018 in theaters for two weeks before airing on Netflix, and was nominated for an Academy Award for best picture. It didn’t win, partly because this practice is controversial and goes against what many theater owners and Academy members think of as traditional theatrical movies eligible for awards (and partly because a black & white subtitled movie isn’t about to win an Oscar unless it’s for Best International Feature Film, which it did win). Theater owners want minimum three-month theatrical windows. Netflix led the way last year with more than 20 Oscar nominations.
Netflix’s 2019 original movie, Martin Scorsese’s The Irishman, starring Robert De Niro, Al Pacino, and Joe Pesci, was nominated for several Academy Awards – even though many theaters in the U.S., Canada, and Europe refused to run it in the short window Netflix insists upon. Another well-received movie in 2019, Marriage Story (starring Adam Driver and Scarlett Johansson), was also nominated for numerous awards. Both were nominated for Best Picture. Because of COVID-19, the 2020 Academy Awards will reportedly allow streaming movies that otherwise would have had theatrical runs to be eligible for an Oscar.
Netflix has been gradually raising its prices over the past few years – a necessity since the streamer spends significantly more than its competitors on original content and steadfastly refuses to accept advertising. It currently has three pricing plans: Basic ($8.99 per month – you can only use one screen at a time and resolution is limited to SD, equivalent to pre-HDTV); Standard ($12.99 per month – you can use two screens at a time in HD); Premium ($15.99 per month – you can use four screens at once in HD or 4K Ultra HD if available).
While Netflix’s growth in the U.S. has slowed, due primarily to increased competition in the streaming wars, it continues to see strong growth internationally. From 2017-2019, Netflix’s subscribers grew from 58.4 million to 67.1 million in the U.S. and Canada (+15%). During the same period, it increased from 26 to 47.4 million in Europe, the Middle East, and Africa (+82%), from 19.7 to 29.4 million in Latin America (+49%), and from 6.5 to 14.5 million in the Asia Pacific region (+123%).
During the first quarter of 2020 Netflix grew to 182.8 million subscribers worldwide, 69.97 million in the U.S. and Canada. Of the 15.7 million added in Q1, 2.3 million (15%) were in the U.S. and Canada while 13.5 million (85%) were international. A survey conducted by Morning Consult and The Hollywood Reporter showed 35% of respondents said Netflix was the streaming service they watched most since health expert guidance recommended staying away from public gatherings. No other streaming service broke 10%. According to ComScore, Netflix’s OTT app share of streaming hours went from 25.2% the week of February 3rd to 26.7% the week of May 11th. This compares to a change from 9.9% to 11.4% for Amazon, 17.6% to 14.7% for Hulu, 4.3% to 4.8% for Disney+, 21.7% to 21.6% for Youtube, and 21.3% to 20.8% for “all other.”
Here are some things that will continue to benefit Netflix going forward:
- Netflix has more original scripted series (both current and canceled but still available) than Amazon Prime, Hulu, CBS All Access, and Disney+ combined.
- Netflix says they have a strong pipeline of new original content, and doesn’t expect COVID-19 to adversely affect its 2020 release schedule. Depending on the length of various lockdowns, production might be impacted in 2021.
- The coronavirus’s impact on the economy will negatively impact advertising revenue more than subscriber revenue.
- Netflix has by far the best user interface of any streaming service.
- Netflix is the only streaming service that focuses only on streaming. It is not worried about linear broadcast or cable TV, theme parks, live sports, or theatrical movie releases. Of course, it remains to be seen how much of an advantage this is after the lockdowns are lifted – but I have no reason to believe Netflix will give back most of the gains it is making now.
- Currently more than three-quarters of TV homes subscribe to at least one streaming service. According to Hub Entertainment Research, 63% of U.S. households subscribe to Netflix, 42% to Amazon Prime Video, 31% to Disney+ (which surged during the pandemic, particularly among homes with kids), 28% to Hulu, and 6% to Apple TV+. CBS All Access + Showtime, which will soon be expanded to include all of the merged Viacom CBS company, is currently in about 11% of TV homes.
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