×

Netflix Licensed Content Generates 80% of U.S. Viewing, Study Finds

Netflix is spending a pretty penny on original entertainment — but while that stuff grabs most of the headlines, it’s actually licensed titles like TV show reruns that still form the core of the company’s streaming business.

That’s according to a data analysis from 7Park Data, which found that 80% of Netflix U.S. viewing is from licensed content with 20% from original shows like “House of Cards” or “Stranger Things.” The firm also found that 42% of Netflix subscribers watch mostly licensed content (95% or more of their total streaming). Just 18% of Netflix’s U.S. streaming customers are “originals dominant,” whose viewing comprises 40%-100% of originals, according to 7Park. The data is for the 12-month period that ended September 2017.

Top licensed titles on Netflix for that period included “Breaking Bad,” “Grey’s Anatomy,” “The Blacklist,” “How I Met Your Mother,” “The Office,” “Parks and Recreation,” “Criminal Minds,” “Supernatural,” “The Flash,” and “Friends.” (Note that “How I Met Your Mother” rolled off Netflix and moved to Hulu in November 2017 under a deal with 20th Century Fox Television.)

For Hulu, which has fewer original series than Netflix, the ratio of licensed-to-original content viewing is even higher: 97% of Hulu streams were from licensed content for the 12 months ended September 2017. Hulu’s biggest breakout success to date has been award-winning series “The Handmaid’s Tale,” based on Margaret Atwood’s novel.

Popular on Variety

Moreover, while originals play an important role in driving new subscriptions, even here licensed content has the edge: 58% of new Netflix U.S. subs watched licensed programming first, while 89% of Hulu subs did.

Even when Netflix debuts a much-hyped new show, licensed content remains the bulk of U.S. customers’ viewing. For example, in the seven days after “Stranger Things” season 1 debuted, licensed shows were still 63% of TV viewing; in the week following the premiere of “Black Mirror” season 3, around 88% of TV series viewing was licensed content, 7Park found.

There aren’t public numbers on what the tonnage is of Netflix’s originals vs. licensed content. It’s possible that original TV shows and movies overindex in terms of viewing — but the point is, for all the noise about Netflix originals, the bulk of its value proposition for consumers is still largely in second-run (or later) content windows.

Reps for Netflix and Hulu declined to comment on the 7Park report.

Of course, as with other attempts to measure SVOD services, some caveats are in order about the limitations of 7Park’s methodology. Most significantly, the research firm’s panel measures only desktop viewing — excluding mobile and connected-TV platforms. (According to 7Park, it has conducted “extensive testing” of its data against industry metrics for mobile and connected TV platforms, indicating that the data is “highly representative of all viewership, regardless of platform or device.”) Meanwhile, 7Park claims to have more than 2 million panel members in 50 countries, but it doesn’t disclose how many it has in the U.S. or what the margin of error is for the latest study.

That said, there’s no denying that licensed content remains a key part of the lineup for Netflix, Hulu, Amazon Prime Video and other services. Such programming is popular because there’s already a broad awareness among consumers of TV shows like “Breaking Bad” or “Grey’s Anatomy.” Plus, in a subscription VOD streaming environment, viewers are able to binge-watch full seasons — and they don’t have to watch ads.

“Licensed content is the engagement engine that drives SVOD viewership, retention and revenue,” commented Christopher Coby, senior industry analyst at 7Park Data.

Even so, Netflix isn’t taking its foot off the gas on the originals front. CFO David Wells projected the company will have some 700 original series total globally this year. Netflix, which expects to spend up to $8 billion on content in 2018, has set a long-term target of allocating 50% of its content budget to originals.

The company’s strategy continues to be, “Let’s continue to add content — it’s working, it’s driving growth,” Wells said at an investor conference in February.

And in fact, Netflix’s booming slate of original content is moving the needle. For the 12-month period ended September 2016, just 12% of U.S. streams were Netflix originals — increasing to 20% the following year, per 7Park’s study.

New York-based 7Park Data, founded in 2012, is backed by investors including Mueller Ventures. The company sells data tracking Netflix, Hulu and Amazon VOD viewing to clients across the entertainment industry including studios, TV networks, production companies, and talent agencies.

Per 7Park’s analysis, the most popular Netflix originals for the 12 months ended September 2017 included: “Stranger Things” season 1, the fifth seasons of “Orange Is the New Black” and “House of Cards,” “Marvel’s Luke Cage,” “Marvel’s The Defenders,” “Marvel’s Iron Fist,” “13 Reasons Why,” “Ozark,” “Santa Clarita Diet,” “A Series of Unfortunate Events,” “Master of None” season 2, “Narcos” season 3, “Grace & Frankie” season 3, “Black Mirror” season 3, “The Unbreakable Kimmy Schmidt” season 3, and “Bojack Horseman” season 4.

More Digital

  • Amazon Italy

    Amazon Moving Into Italian Originals With Multigenre Slate (EXCLUSIVE)

    Amazon is moving into Italian originals with a multigenre slate comprising “Bang Bang Baby,” a Milan-set mob drama with a young woman at its center, a comedy series centered around popular local star Carlo Verdone, and an unscripted food travelogue titled “Dinner Club.”  The streamer’s first forays into Italian scripted content were announced Thursday at [...]

  • 100 Thieves

    Esports Organization 100 Thieves Unveils New Facility in Los Angeles

    As of Wednesday, popular esports organization 100 Thieves has an official home in Los Angeles. The group unveiled its new 15,000 square-foot facility, officially named the 100 Thieves Cash App Compound, in a media preview with some of its biggest personalities and investor Scooter Braun on hand. Also in attendance was Jack Dorsey, the CEO [...]

  • Amazon Music

    Amazon Music Tops 55 Million Users, Still Playing Catch-Up to Spotify and Apple

    Amazon is famously reluctant to release specific numbers about its users, so it’s notable that the e-retailing giant announced that it has surpassed 55 million customers worldwide for Amazon Music. The company didn’t reveal how many of those users are on its various pricing tiers, but said subscriptions to Amazon Music Unlimited grew by more [...]

  • The Crown Season 3 Oliva Colman

    Record Intl. Growth Sees Netflix Beat Q4 Earnings Forecast

    Fast growth in international markets, contrasting with only sluggish subscriber gains in North America, was a major factor behind streaming giant Netflix’s better than forecast growth in the last quarter of 2019. The company is set on keeping up that international momentum. Globally Netflix added 8.76 million new customers in the three months to December [...]

  • TikTok - LA lobby

    TikTok Opens New L.A. Office in Culver City

    TikTok, in a signal of the short-form video app’s growing clout and entertainment ambitions, announced the company’s Los Angeles operations have moved into a new 120,000-square-foot office in Culver City, Calif. TikTok’s new office space occupies five floors at the C3 campus at 5800 Bristol Parkway in Culver City. According to the company, the space [...]

  • SiriusXM president and CCO Scott Greenstein

    SiriusXM's Scott Greenstein Named Music Visionary of the Year by UJA-Federation

    SiriusXM president and chief content officer Scott Greenstein will be honored by the UJA-Federation of New York as its Music Visionary of the Year on June 4 in New York City. The award recognizes exceptional professional accomplishments and commitment to philanthropy. Previous recipients have included Sony Music Group CEO Rob Stringer, Republic Records co-founders Avery [...]

  • Anjelah Johnson'The Curse of La Llorona'

    HA Comedy Festival Sets Lineup, HBO Max Comedy Special

    The newly launched HA comedy festival backed by WarnerMedia and New Cadence Productions has set its dates, talent lineup and plans for a special to air on HBO Max. The festival, to be held Feb. 21-23 in San Antonio, Texas, is designed as a showcase for Latinx comedians. It’s part of a first-look development pact [...]

More From Our Brands

Access exclusive content