Netflix, the world’s largest streaming service, has long been the go-to destination for TV shows and movies for millions of viewers worldwide. Netflix has become a household name when it comes to streaming entertainment, with over 200 million subscribers. Although there has been customer dissatisfaction over the years, the company still remains on top due to its creation of original content.
Netflix has faced uproar from customers over the years, mostly caused by the removal of many fan favorites such as “The Office” and “Friends”. The removal of “The Office” was due to its extreme expenses for Netflix to renew the streaming licenses. Prior to its removal from the site, Netflix was reportedly spending $500 million a year just to keep it in the US library. The removal of these shows decreased the subscriber count, sending previous customers to other streaming services. The rise of these competitors over the years such as Disney+, Hulu, and Prime Video has affected Netflix’s marginal growth by creating alternative options for viewers. However, with the highest number of subscribers in 78 countries and over 200 million customers globally, Netflix has remained the most popular video streaming service.
Netflix’s continued success as a dominant force in the streaming industry is accredited to its investment in original content. By creating its own “Netflix Originals,” Netflix reduces its reliance on licensing agreements with third-party studios, giving the company more control over its content library. Producing original content also allows Netflix to differentiate itself from competitors by offering exclusive content that cannot be found elsewhere. This makes Netflix hold power to keep subscribers loyal to the site. With shows such as the teen drama series “Outer Banks” and the science fiction horror series “Stranger Things” generating massive buzz and high viewership numbers, the site has stayed afloat. These shows have been popular with audiences and have helped Netflix increase its subscriber base. Some may say Netflix Originals alone are keeping the site alive.
The success of popular shows has been crucial to Netflix’s growth and profitability. However, producing original content can be very expensive, with budgets for some shows reaching hundreds of millions of dollars. “Outer Banks” season 3 had a budget of around $50 million and “Stranger Things,” being the most expensive Netflix original series, had an estimated production cost of around $30 million per episode. Despite these high production costs, popular shows generate significant revenue for Netflix. For example, Stranger Things is estimated to have generated over $1 billion in merchandise sales alone. The shows clearly drive a significant amount of revenue for Netflix which in 2022 made $31.616 billion with $4.5 billion in profits.
Almost 90% of all of Netflix’s revenue comes from subscriptions and partnerships while roughly 10% of it comes from advertising. Without having ads, Netflix uses brand integration, a marketing strategy where a brand is integrated into the storyline of a TV show or movie. This is done in a subtle manner, without disrupting the flow of the storyline, making it an effective way of advertising products to viewers. For example, in the third season of the original series Stranger Things, Coca-Cola’s cans were featured prominently, with Coca-Cola receiving $3.4 million through the placement of its cans (valued at $1.66 million). These brand integrations allow Netflix to produce even more profit through their original content and are a big part of their added success.
Overall, The company’s original content has become cultural touchstones, generating much success for Netflix. As the streaming industry continues to evolve, Netflix’s commitment to producing original content will be crucial to its continued growth.