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Originals to beat licensed content on Netflix

The study found Netflix’s most popular original was Stranger Things

Demand for Netflix originals is set to outstrip that for licensed programming by the autumn of 2019, supporting the streamer’s strategy to have over half of its library made up of original material, research has found.

The Demand for Television on SVoD Platforms report from data firm Parrot Analytics and S&P Global Market Intelligence media research group Kagan suggests audience desire for originals on Netflix will exceed 50% in October next year.

The research, which analysed data from July 2017 to June 2018, found that reliance on licensed material had dropped 10.9% from almost three-quarters to just over 60%. In the same period, demand for original content rose from around 27% to just under 40%.

Data suggests that demand share for Netflix originals grew an average of 1.0% each month, forecasting that it will overtake licensed programming in around 10 months.

“The proportion of the demand share from Netflix original titles has generally grown month-on-month, with the demand share for licensed titles increasing from the month before on only four occasions,” the report stated. “The total monthly demand expressed for all titles in Netflix’s catalogue was found to discover how the overall demand for television content on the platform has evolved: demand for Netflix’s catalogue in the US has increased at an ever-growing rate over the past year, more than doubling between June 2017 and March 2018.

“While the number of titles on the service have also increased over this time period, catalogue growth alone does not account for the exponential growth in audience demand, suggesting that Netflix has been offering more popular titles over the past year.”

The report used Parrot Analytics’ globally standardised demand expressions metric, which quantifies the weighted audience demand for a title in a specific market regardless of which platform it airs on.

The five originals most popular with audiences are Stranger Things (29.6 million demand expressions in Q1 2018), Black Mirror (18.4 million), Orange is the New Black (12.4 million), Money Heist, aka La Casa de Papel, (11.7 million) and The Crown (11.3 million).

The report appears to contradict a study by 7Park Data earlier this year which suggested that four of every five streams on Netflix were of licensed titles and, despite Netflix’s increasing emphasis on original content, 42% of viewers watched few or no originals.

Parrot and Kagan’s research did note that most of the demand growth came from licensed titles and that the trajectory of audiences’ interest in originals was based on the future performance of hits like Stranger Things.

“We have assumed that Netflix’s US licenses for content from third-party libraries is constant,” the report adds. “We have not included in our forecast any substitution effects. Competing SVoD platforms launched over the next 12 months could potentially steal audience demand share away from Netflix.”

“The future for the industry is likely to be even more crowded and the winners are still unknown,” said Deana Myers, research director at S&P Global Market Intelligence. “Walt Disney is expected to debut its SVoD service in 2019 and its proposed buy of the studio and libraries of 21st Century Fox will add a vast amount of content to this service. Other anticipated SVoD launches include those by Apple and Warner Media.

“We estimate the overall US SVoD industry has many strong years of growth in its future, particularly as competition from Disney and Apple could impact the market.”



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