Netflix is currently going through a massive transition. The video streaming giant gained much of its dominance by allowing subscribers to binge-watch reruns of old shows and movies, and now it is greatly focusing on developing its original content.
Subscribers in favor of original content
Netflix executives have said on several occasions that the best way to provide value to subscribers is to offer them original (and exclusive) TV shows and movies. It is for this reason that the company decided to release 600 hours of original content this year — which is almost double its 2015 output — including 31 original shows.
Netflix debuted its DVD-by-mail service in 1998 and since then has reinvented itself, so this is not something new for it. So it becomes important to know whether subscribers will approve of this shift in Netflix’s programming or not. RBC Capital Markets analysts say their research found that subscribers do approve.
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Almost half (49%) of the respondents think that the quality of Netflix’s content has improved over the last year. Of that group, 30% think the improvement is great, while the remaining think there is a little improvement. Just 10% believe the content has gotten worse, while the remaining subscribers think the quality has remained almost the same.
RBC informed investors that 60% of the respondents told researchers that original content greatly influenced their decision to remain a Netflix subscriber, and this was higher than what it was two years ago (46%). The original content was not important for 24% of the respondents. Going forward, original content will have much more impact, RBC analysts believe, and the streaming firm is betting on this.
RBC’s findings in line with Netflix’s strategy
RBC’s findings are consistent with the trends the streaming firm has seen in the past, the firm’s analysts noted. This suggests that the process of remaking itself will not lead to a drop in subscriber happiness, despite the fact that the company has trimmed its catalog by over 30% since the beginning of 2014.
Netflix CFO David Wells said last fall that the impact of originals had been found to be a lot more compared to that of licensed content.
More recently, Ted Sarandos, Netflix’s head of content, said, “Many of our long time U.S. members might recognize that summer is a time when we refresh a large part of our film catalogue,” and this year is no exception, but there is a difference.
Netflix is doing away with a batch of non-exclusive titles and replacing it with content that will be exclusive to its service among the many streaming subscription video services, he added.