The ‘Netflix effect’ is back as studios license old shows to streaming rivals
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Analysts say some of Netflix’s competitors are reversing tactics in the streaming wars and increasing their programming offerings by licensing their older TV shows and movies to streamers, but profit margins are increasing. It is said that there is a possibility of putting pressure on
When Netflix launched its streaming service in 2007, it relied heavily on programming licensed from other companies. But after Walt Disney, NBCUniversal, Paramount, and then Time Warner launched their own streaming services, they removed many of their shows from Netflix to avoid feeding. A company that has grown into its biggest competitor.
But with legacy media groups under pressure to generate streaming profits, licensing revenue is looking attractive again, even if it comes from Netflix. This summer, Warner Bros. Discovery’s HBO network began licensing some of its older shows to Netflix. anxiety, 6 feet under, ballers and band of brothers.
“The conventional wisdom for the last 10 years has been to keep everything in-house,” HBO CEO Casey Bloys said at the recent Code conference. “But in the history of television, syndication, or selling a show somewhere else, was a brass ring. It meant the show was successful and had a life elsewhere. ”
Morgan Stanley analysts said the reinstatement of the licensing deal would be a “long-term positive” for Netflix and would “close” its lead over rivals in the streaming space. But the bank added that licensing costs and Netflix’s investments in gaming and other areas could put pressure on margins in 2024. Analysts raised their outlook for Netflix’s overall cash expenditures next year by $500 million to $17.7 billion.
Netflix is scheduled to report earnings on Wednesday, and investors are expected to watch for whether it plans to raise subscription prices and any signs of progress on new advertising space. The latest data on crackdowns on password sharing will also be of interest.
The reinstatement of licensing deals coincides with the Hollywood strike, which has halted production of new shows and is expected to significantly delay TV and movie releases into next year. The Writers Guild of America reached an agreement with the studio five months later in September, but the SAG-AFTRA union, which represents actors, is still on strike. Those talks broke down last week when the union demanded a share of subscriber revenue from streamers, studio officials said.
Despite the dark atmosphere surrounding the strike, studio experimentation with licensing deals appears to have breathed new life into some old shows. After NBCUniversal licensed the show suit The show, which aired from 2011 to 2019 and starred Meghan Markle, was revived on Netflix in June. The legal drama held the top spot on the Nielsen Streaming Top 10 for three months, an example of the “Netflix effect” on older shows.
Bloys said licensing the show to Netflix also increased traffic for the show on Warner Discovery’s Max streaming platform, which is home to HBO shows. bowlerIt is a sports drama that aired from 2015 to 2019. bowler After entering Netflix, it entered the Nielsen top 10. anxietya comedy starring Issa Rae that aired from 2016 to 2021, got a boost as well.
“Even if you don’t do anything to Max, engagement will increase. bowler and anxiety “We actually saw a spike when we joined Netflix,” he said at the code conference. “The initial experiments we did with some titles had an immediate positive impact on Max.”
There are limitations, Bloys added, pointing to two popular HBO shows that may not be available on Netflix. “I doubt if you’ll see it. inheritance or white lotusHe said.
