12 Apr Nathanson: Netflix Content – A Look under the Hood
With all eyes on the monthly pricing of Disney+ relative to (more expensive) Netflix, analyst Michael Nathanson takes a look at Netflix content and what viewers like about it
April 8, 2019 | As Disney+, Apple and WarnerMedia launch new direct to consumer products in 2019, the single most fascinating subject for media research is the dynamic state of the SVOD market. Given that the category leader is Netflix with now over 60 million U.S. subscribers and a decade in operation, we surveyed 500+ people domestically to understand Netflix’s subscriber preferences, binge-watching habits, pricing elasticity and churn.
In thinking about what makes the service so special – and what others may be missing – the depth of the content library, offered commercial free, appears to provide something for everyone on Netflix and confirms that viewership is spread over a long tail of content.
We asked an open-ended question and let our survey respondents surprise us with their answers to the question: What are your favorite shows to watch on Netflix? List up to 5 shows. The answers from 430 people gave us a look into 271 different titles. The breadth and variety of the answers point to the deep value of a diverse library built on the back of syndicated shows, but more recently driven by original content.
Stranger Things and Orange is the New Black are by far the leaders of favorite shows with 13 percent and 10 percent of the population, respectively, listing them as their favorite shows. Half of the top 20 most popular shows are Netflix originals with multiple seasons suggesting the quality of “bingeable” TV Netflix is able to produce. Since the launch of the first season of House of Cards in February of 2013, Netflix’s embrace of original content has helped drive adoption of the service and created higher perceived value, as shown above, for users. The long tail of answers (271 different titles) is proof of the variety of the library, mostly supported by syndicated content. After the top original Netflix series, the most highly recalled catalog content includes – no surprise – Friends (from Warner Bros.), The Office (from NBCUniversal) and Movies (from a multitude of studios including Netflix).
With the combination of Fox’s and Disney’s TV studios with controlling ownership in Hulu and the launch of Disney+, Netflix will lose programming from this important source. However, we don’t think CBS is willing to play the same game and continues to license content to Netflix. WarnerMedia, now owned by AT&T, has not been clear in their intentions. On one hand, they agreed to license Friends for another year. On the other hand, they have made plans to launch three new SVOD services this year with content from Warner Bros. NBC Universal has also continued to be open-minded to continue to license to Netflix as they explore the launch of their own SVOD service. Taken together, we continue to believe that Netflix will be able to source content from Hollywood’s studios because few have embraced Disney’s strategy.
What are your favorite shows to watch on Netflix?
- Stranger Things (Netflix Original)
- Orange is the New Black (Netflix Original)
- The Office (NBC )
- Friends (TWX)
- Grace and Frankie (Netflix Original)
- Movies (Various studios)
- Ozark (Netflix Original)
- Daredevil (Netflix Original)
- Grey’s Anatomy (Dis)
- Black Mirror (Netflix Original)
Michael Nathanson is Founding Partner and Senior Research Analyst at MoffettNathanson, covering both the Media industry and the leading Digital Advertising companies. This was excerpted from his April 8 research note, “Netflix Suvey: The Walmat of SVOD for a Reason.”