The Ratio of Netflix Originals to Licensed Films is Extraordinary

New research by Parrot Analytics and Kagan, a media research group within S&P Global Market Intelligence, shows support for one of Netflix’s most important strategic goals: To have 50% of its content be comprised of Netflix originals. According to the report, which leverages Parrot Analytics’ globally standardized Demand Expressiona metric, demand for Netflix Originals is estimated to overtake the share of demand for licensed titles by October 2019.

Parrot Analytics, the leading big data TV analytics firm specializing in audience demand measurement worldwide, and Kagan joined forces to produce a comprehensive report on demand for television content across streaming subscription video-on-demand (SVOD) platforms in the United States. Overall, the report found demand for content on all major SVOD platforms, including Netflix, Hulu, HBO Now, Showtime, and Starz, has increased over the past year.

In its analysis of demand for Netflix’s content, the report compared the sum of U.S. demand for both Netflix original series and the licensed titles available on the U.S. Netflix service each month. While currently the most in-demand content tends to be licensed titles, the proportion of the demand share from Netflix original titles has generally grown month over month. Overall, for the 12 months analyzed, the demand share for Netflix originals grew an average of 1.0% each month. From July 2017 to June 2018, the streaming service’s reliance on licensed content dropped by 10.9%. Based on this 12 months of data, the report forecasts that Netflix will generate 50% of U.S. audience content demand with its own original content from October 2019 onwards.

For the premium channel VOD platforms (HBO Now, Showtime, and Starz), new content from their linear channels tends to be the most in-demand. However, Parrot Analytics affinity analysis2 reveals that the respective back catalog of each VOD platform continues to play an important role, indicating that older titles likely remain an important driver of subscriber loyalty.

“The future for the industry is likely to be even more crowded and the winners are still unknown,” said Deana Myers, Research Director, 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.”

Other new entrants to the online video space, like Facebook Watch, YouTube and DC Universe, are also investing heavily in originals and acquired content. At the same time, content spending for Netflix, Amazon and Hulu is expected to continue to grow at double digit rates.

The research in this report is based on a catalog demand analysis of digital-only Netflix and Hulu services, and a premium channel VOD demand analysis based on TV demand data pertaining to HBO Now, Showtime and Starz.

For the full report, visit: https://insights.parrotanalytics.com/svod-tv-demand-2018

Parrot Analytics is a data science company that empowers media companies, brands and agencies to understand global audience demand for television content. Wielding the world’s largest audience behavior data sets, the company has developed the world’s only global cross-platform, country-specific audience demand measurement system. Parrot Analytics captures an unprecedented spectrum of actual audience behavior including video streaming consumption, social media, blogging platforms, file-sharing and peer-to-peer consumption spanning 100+ countries. This enables media companies, for the very first time, to understand audience demand for content across all content distribution platforms in all markets around the world.

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