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Netflix Woes Just Beginning As It Loses Key Show Licenses

By Gary Symons

TLL Editor in Chief

Netflix faces an existential threat as it will soon lose the licenses for many of its most-viewed shows to rival streaming services.

The streaming pioneer is rightly lauded for leading the way for the entire industry, with a business model that dismantled Blockbuster and posed the upstart streamer as a bona fide threat to traditional television.

But now it’s Netflix that’s under threat, as content producers mount their own streaming services and take back many of the shows that are topping the Netflix charts.

It’s already been a challenging few weeks for Netflix. The company’s stock lost a stunning 35% of its value last month after Netflix announced its subscriber numbers had declined for the first time in a decade, shedding $50 billion off its market cap. There were extenuating circumstances for the drop in subscriber numbers, including the fact Netflix lost 700,000 subscribers in Russia due to the war in Ukraine.

As well, with pandemic restrictions fading away, fewer people are locked up at home, surfing through the Netflix catalog to stave off terminal boredom.

However, it’s the structural problems the company faces that has freaked out analysts and investors, and the major issue is the increased competition from rival streaming services like Disney, HBO Max, Prime Video and Paramount+, among others. On the one hand, those rivals are inevitably stealing away some of Netflix’s customer base, but more seriously, they are also terminating licenses that were previously granted for some of the most popular shows on Netflix, like The Office and Friends.

Those two shows were chart toppers for Netflix in 2020, and drew more viewers than any of Netflix’s homegrown films or series. They’re already been lost to  Netflix in the US, and will soon be taken off the list for viewers in the UK and other countries, where they remain two of the top-viewed shows.

If you take a look at the shows currently topping the most viewed list in the US, you’ll see it is also dominated by older series that Netflix has licensed. According to Nielsen ratings, the top show on Netflix was Criminal Minds, with 33.9 billion minutes watched, followed by CoComelon, a hugely popular preschool hit that served up 33.3 billion minutes viewed.

Netflix also aired 14 of the 15 most viewed of the licensed TV shows of 2022 on the Neilsen chart, starting at number 3 with NCIS, Grey’s Anatomy, Heartland, Manifest, and Supernatural at number 7.

By contrast, the top ‘Original’ show for US streaming customers was Lucifer on Netflix, which tallied 18.3 billion minutes, or just over half as much as Criminal Minds. Squid Games also did well with 16.4 billion minutes, but again, that tally falls far short of the top licensed shows.

The same thing is true of films, particularly those from Disney, which have by far the most minutes watched. In 2021 Disney Plus held the rights to 11 of the top 15 films on the Neilsen streaming chart, led by “Luca” (10.6 billion minutes), “Moana” (8.9 billion), “Raya and the Last Dragon” (8.3 billion) and “Frozen II” (5.7 billion). The bright spot for Netflix was the original film “Red Notice,” starring Dwayne Johnson, Gal Gadot and Ryan Reynolds, which came in at the No. 5 spot (with 5.5 billion minutes).

It is worth noting that in 2021 Neilsen was not yet tracking some of the other streaming services, including HBO Max, Paramount+, or Peacock. However, the rankings for top streaming movies in 2021 shows that when Netflix was compared to Disney+, Prime Video, Hulu and Apple TV+, it managed to appear three times in the Neilsen Top 15 for Red Notice, Mitchells vs the Machines, and We Can Be Heroes.

Every other film is produced by Disney, other than The Tomorrow War which aired on Amazon Prime Video.

In the past, prior to the rise of the Streaming Wars, many Disney films and series appeared on Netflix, but now even the few remaining Disney properties are being removed, and that also includes series from Disney’s 20th Century Fox division, like Arrested Development, Glee, and New Girl, among others.

The same thing is happening with other content producers, impacting viewers not just in the US but around the world. In the UK, for example, an article in The Guardian newspaper bemoaned the fact that Warner Bros. Discovery has removed major hits like Friends and The Big Bang Theory to drive membership in its own HBO Max service, which will soon launch in the UK. Similarly, Paramount is removing its content from Netflix, which includes the perennially popular Star Trek series.

Netflix has seen this train coming down the track for years now, and to its credit responded in a timely fashion by investing heavily in its own production. As of 2021, Netflix was spending $17 billion on making or licensing content, and it has been very successful in landing shows that are both critical and popular hits. This past year it can boast of blockbuster films like the Oscar nominated Power of the Dog, Red Notice, The Adam Project, and the controversial Don’t Look Up. It also includes a wide slate of popular series, like Ozark, Cobra Kai, Inventing Anna, and many more.

In fact, while some licensed content does top the Netflix viewing minutes metric, it’s also true that in 2021 those licensed shows comprised only 10% of its most popular shows. When you take a look at the top Original Streaming Programs for 2021, the ability of Netflix to remain relevant is impressive to say the least. In fact, Netflix aired nine of the Top 10 Original Streaming Programs last year, including Lucifer, Squid Game, Bridgerton, the Crown, and more. It also produced 12 of the top 15.

 

What is more concerning, however, is whether Netflix can continue to stay ahead of its well funded rivals. While Netflix is estimated to be spending $17 billion in producing or licensing content this year, they are being outspent by Disney with $33 billion in 2022, and by Warner Bros Discovery at $20 billion.

Netflix is not likely to die away, as the company has brilliantly adapted by acquiring gripping content from a surprising variety of international sources, and it has shown a fine critical eye in picking successful projects.

The threat is more that, because Netflix is losing access to a lot of its most popular licensed content, and now faces an increased number of well stocked competitors, it will inevitably lose some viewers who are unwilling to pay for every single streaming service out there. Netflix itself is very aware of this fact, and in its last report to shareholders, the company conceded it is likely to lose more than 2 million additional viewers this year.

Streaming Wars: Netflix Fires Back At Amazon With Walmart Merchandise Deal

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