Netflix is doubling down on originals (NFLX)

BI Intelligence

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Netflix is doubling down on its original programming next year, Variety reports.

Original programming on the platform should hit 1,000 hours in 2017 — which is a conservative estimate, and more than twice the current amount — as the company works toward its stated goal of having originals account for 50% of its catalog.

Netflix's original content strategy is playing out in several spaces.

• Unscripted shows: Ted Sarandos, Netflix's chief content officer, emphasized the importance of unscripted shows moving forward, noting that the company is set to debut 20 new unscripted shows in 2017. He's particularly excited about the potential for these kinds of shows to reach wide audiences in different geographies, as touched upon below. 
• Cosmopolitan content: Netflix is focusing on content that can travel internationally, transcending borders and cultures. Sarandos highlighted a new unscripted competition show, the "Ultimate Beastmaster," which is produced by Sylvester Stallone and features contestants and commentators from the US, Brazil, South Korea, Mexico, Germany, and Japan. 
• Original movies: The company wants to adapt its approach for creating TV events for the movie universe, and has an eye on creating franchises in the guise of Disney and Marvel films. Netflix has also made moves recently toward the traditional box office, releasing films on the large screen. In total, movies account for about one-third of viewing time on Netflix, Sarandos said.
• Staying off live: In response to a question about whether Netflix is interested in buying sports rights, Sarandos reiterated that the company isn't currently a platform for live programming. But while he dismissed the notion of bidding for existing league rights, he did raise the possibility of Netflix getting into creating its own sports leagues.
• Two-way street: Sarandos is wary of getting "trapped" into producing every piece of original content in-house, recognizing the merits of partnering with third parties and securing exclusive licenses for existing intellectual property. This collaborative approach helps Netflix secure a breadth of programming on its platform. 

Over the last few years, there’s been much talk about the “death of TV.” However, television is not dying so much as it's evolving: extending beyond the traditional television screen and broadening to include programming from new sources accessed in new ways.

It's strikingly evident that more consumers are shifting their media time away from live TV, while opting for services that allow them to watch what they want, when they want. Indeed, we are seeing a migration toward original digital video such as YouTube Originals, SVOD services such as Netflix, and live streaming on social platforms.

However, not all is lost for legacy media companies. Amid this rapidly shifting TV landscape, traditional media companies are making moves across a number of different fronts — trying out new distribution channels, creating new types of programming aimed at a mobile-first audience, and partnering with innovate digital media companies. In addition, cable providers have begun offering alternatives for consumers who may no longer be willing to pay for a full TV package.

Dylan Mortensen, senior research analyst for BI Intelligence, has compiled a detailed report on the future of TV that looks at how TV viewer, subscriber, and advertising trends are shifting, and where and what audiences are watching as they turn away from traditional TV. 

Here are some key points from the report:

• Increased competition from digital services like Netflix and Hulu as well as new hardware to access content are shifting consumers' attention away from live TV programming.
• Across the board, the numbers for live TV are bad. US adults are watching traditional TV on average 18 minutes fewer per day versus two years ago, a drop of 6%. In keeping with this, cable subscriptions are down, and TV ad revenue is stagnant.
• People are consuming more media content than ever before, but how they're doing so is changing. Half of US TV households now subscribe to SVOD services, like Netflix, Amazon, and Hulu, and viewing of original digital video content is on the rise.
• Legacy TV companies are recognizing these shifts and beginning to pivot their business models to keep pace with the changes. They are launching branded apps and sites to move their programming beyond the TV glass, distributing on social platforms to reach massive, young audiences, and forming partnerships with digital media brands to create new content.
• The TV ad industry is also taking a cue from digital. Programmatic TV ad buying represented just 4% (or $2.5 billion) of US TV ad budgets in 2015 but is expected to grow to 17% ($10 billion) by 2019. Meanwhile, networks are also developing branded TV content, similar to publishers' push into sponsored content.

In full, the report: 

• Outlines the shift in consumer viewing habits, specifically the younger generation.
• Explores the rise of subscription streaming services and the importance of original digital video content.
• Breaks down ways in which legacy media companies are shifting their content and advertising strategies.
• And Discusses new technology that will more effectively measure audiences across screens and platforms. 

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