With the biggest strikes in Hollywood history, entire companies undergoing tremendous shifts, and a multitude of other trends, 2023 has been an interesting year for the streaming industry. In its latest report, the website What’s on Netflix reviewed what have been Netflix’s strengths and weaknesses over the past year in this changing context.
✔ LICENSING IS BACK
When Netflix first began its streaming service, its entire library consisted of licensed titles from Hollywood studios and TV show and movie owners. Since 2013, Netflix has heavily invested in its own roster of shows and movies. The total number of unique titles in its Original library recently reached 4,000, representing over 55% of the total US library.
“The reason for this heavy investment is that there were early signs competitors of Netflix would begin to cut off licensing. Disney’s Bob Iger famously reversed his position on licensing to Netflix, moving from a first-window deal for all their theatrical output from 2016-2019 to compare the sharing of their content to handing nukes to the enemy, thereby cutting off the supply,” said Kasey Moore, Founder & Editor-in-Chief of What’s on Netflix, and the author of the report.
Like many companies, the reality of their declining legacy businesses and the need to scale their streaming services globally has led to a shortage of cash. This year, the industry has seen more content than ever being licensed to Netflix. Some huge series from the past few decades have been added or re-added. Warner Bros. Pictures is licensing newer movies to Netflix, and for the first time in history, HBO has given Netflix some of its shows.
The picture expands globally as well. Every region has been acquiring more movies and series over the past year. In 2024, this trend is expected to continue, with Disney already announcing it will license over a dozen shows in the United States, and other deals with various providers are expected to continue.
✔ DATA TRANSPARENCY
Over the past few years, Netflix has been the leader when it comes to giving out data for viewership on its shows. Spurred on from improved metrics from the likes of Nielsen and other third-party companies, Netflix has been releasing daily top 10s for the past three years now and top 40 figures for the past two.
This year, they took two steps forward. Firstly, in the summer, Netflix adopted a metric the industry has been using heavily over the past few years: CVE or Completed Viewing Equivalents. This metric takes into account the runtime of a show or movie and uses that against the hours viewed to provide a rough figure of how many people watched a title. "It is by no means perfect, but it is the best way to provide an apples-to-apples comparison," Moore described.
Moreover, later in the year, Netflix provided its first-ever engagement report that revealed hours watched data for thousands of shows and movies on Netflix covering the first six months of 2023. That report has proved valuable for some creators and stakeholders in a show or movie, with this being the first time they have gotten insight into performance.
“For some, divulging this information will never be enough to satisfy their data needs. However, given how far ahead Netflix is compared to its competition, they are still the leader, and we welcome any additional data dumps in 2024,” Moore commented.
✔ PULLING THE TRIGGER ON RENEWALS/CANCELLATIONS
One common critique of Netflix is that it cancels everything. However, data suggests this is not entirely fair, with Netflix reportedly having a better cancellation rate than some of its rivals. In 2023, Netflix made a concerted effort to correctly label its shows in advance, identifying them as limited series or miniseries and showing more confidence in early renewals or providing timely updates on their future.
This shift could be due to the strike or the trend of Netflix shows being designed as limited series. Regardless, this year marked the first time we are not ending it with dozens of shows’ fates up in the air. The conviction in early renewals might also be influenced by viewership decay in shows returning after two years, as seen in “Shadow and Bone.”
✘ SPLIT SEASON RELEASES
2023 saw Netflix embrace split-season releases. After years of sticking to releasing, Netflix experimented with dividing some of its biggest shows into two parts. This year, shows like “The Witcher” and “The Lincoln Lawyer” underwent this split release, and with “Bridgerton” announced to follow suit in 2024, this trend seems set to continue.
“While measuring the impact of these split releases from Netflix’s data is challenging, insights from Google Trends suggest they might be more about filling programming gaps. It would be interesting to see the general consensus on these split-season releases from the viewing public or the data on why Netflix keeps leaning into them for their bigger titles, but for me, at least, they seem to be more bad than good,” Moore noted.
✘ LIVE STREAMING AND SPORTS
Netflix launched live streaming in 2023, offering live events like a comedy special from Chris Rock, the “Love is Blind Reunion Special”, and “The Netflix Cup.” Each stream had its own issues, and they were not bad attempts, but given the competition level from rivals like Prime Video, who have been doing this for years, Netflix has not hit the ground running.
“The issues for the streams came on multiple fronts. In the case of ‘The Netflix Cup,’ the content on offer was ultimately messy and lackluster, while others clearly had viewership issues, discoverability problems, and technical difficulties. Most of these issues were especially evident in ‘The Netflix Cup,’” Moore analyzed.
Regarding sports, Netflix’s tentative approach to sports programming has been cautious. Despite rumors of negotiations for major sports rights, the general view is that Netflix is not fully committed to sports yet. However, their live offerings in 2024, which include the Annual Screen Actors Guild Awards and The Netflix Slam, will showcase a more in-depth lineup.
✘ THE STRIKES
The strikes posed significant challenges for Netflix. In the PR arena and probably overall, they may have come out ahead, avoiding the missteps of Disney and Warner Bros. Discovery’s CEOs. This was mainly because Netflix’s top brass stayed out of the spotlight except for necessary statements that did not cause too much controversy.
Netflix possibly weathered the strike better due to its licensing strategy, a more robust pipeline, and a focus on international titles. Nevertheless, the strikes impacted Netflix’s output and development and lasted much longer than anyone wanted. The slowdown will be more evident next year, especially in the summer, as many shows like “Bridgerton” (season 3), initially slated for a Q4 2023 release, are now being spread out. Titles in development were impacted too, with numerous projects being cut in early development or getting ready for a greenlight.
The strikes hurt shows that were in development and will undoubtedly hurt any returning shows. According to What’s on Netflix, shows coming back two or three years after their initial debut hurt their viewing performance. Thankfully, it does look as though returning shows are being prioritized when it comes to filming starts.