Over the past decade, Netflix has evolved from a licensed content library into a premier destination for original programming. While Netflix offers plenty of shows and movies, original content now takes center stage on the streaming platform. But what sets Netflix's originals and licensed content apart?
The Rise of Netflix Originals
In the early days, Netflix focused on acquiring streaming rights to TV shows and films. However, in 2013, Netflix began heavily investing in original content, releasing the first seasons of "House of Cards" and "Orange Is the New Black."
This marked a major strategic shift for the company. Owning exclusive rights to original shows meant Netflix didn't have to enter into expensive licensing agreements. Originals also allowed Netflix to tailor programming specifically to subscribers' tastes using data from its vaunted recommendation algorithm.
The original content bet paid off handsomely. In 2018, 80% of streaming hours on Netflix came from new shows and movies. Netflix releases around 400 original films and series annually in various languages. Originals like "Stranger Things" and "Squid Game" have become worldwide pop culture sensations.
How Netflix Licenses Content
Even as Netflix pours money into originals, it still licenses plenty of third-party content. Licensing deals give Netflix streaming rights to popular back-catalog shows and nostalgic classics. However, licensed titles constantly rotate on and off the platform as licensing agreements expire.
Netflix licenses shows exclusively for a fixed period, often several years. Content owners can re-license Netflix or sell streaming rights to competitors when the license expires. This explains why shows randomly appear and disappear on Netflix.
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Securing licensing rights can become astronomically expensive, especially for hit shows. For example, Netflix pays over $100 million annually to stream "Friends" and reportedly spends $500 million on the exclusive rights to "Seinfeld."
Key Differences Between Original and Licensed Content
There are several notable differences between Netflix originals and licensed content:
The Future is Original
Netflix will continue licensing external content, and original programming is clearly its priority moving forward. Originals allow Netflix to control its destiny rather than relying on rival studios and networks.
Consumers can watch prestige content anywhere else. However, licensing deals still offer users a valuable back catalog to satisfy nostalgia cravings. Netflix needs a healthy mix of originals and licensed shows to satisfy subscribers. But the future of the platform lies in owned-and-operated original content.
