Image: Seinfeld, NBC
Netflix reported results for Q3 2024 on Thursday. In Q3 Netflix reached an important milestone when it overtook a major legacy media company in terms of Corporate TV Demand Share — that is, demand for all original TV content produced under a company’s corporate umbrella. Netflix (9.6%) jumped ahead of NBCUniversal (9.0%) in Q3 2024 for fourth place in the category.
This metric assesses the long-term viability of media conglomerates and can help value a TV library. It also demonstrates lucrative long-term licensing potential, if Netflix ever decides to pursue that strategy. In just 12 years since its first original debuted, Netflix has built a more in-demand TV empire than NBCUniversal, whose original TV programming dates back to the 1940s.
It would be wrong to underestimate the value of linear content in the streaming era however. Broadcast series — licensed from the very companies Netflix is competing with — continue to strongly over-perform on Netflix. In Q3 2024, broadcast series such as ABC’s “Grey’s Anatomy,” NBC’s “Seinfeld,” and CBS’s NCIS accounted for just 1.0% of the TV shows available on Netflix’s US catalog, but drew 7.0% of the total demand. This is the fundamental dilemma faced by legacy media companies - license titles to Netflix which can probably best monetize this content or keep these titles on their own platforms.
Things shift slowly at this macro level, but Netflix has consistently been gaining ground at the corporate level due to its rapidly growing catalog of in-demand original series. Why does this matter? In-demand original content serves as a powerful motivator to attract subscribers. But increasingly important is the fact that these titles live exclusively on Netflix and exclusive catalog demand reduces churn.
Exclusivity is one of the most important factors to consider when looking at these platforms’ ability to mitigate churn. Keeping users on-platform and paying subscription fees or watching ads is key to monetizing audience attention. Proactively taking steps to prevent churn is important when platforms consider whether they can increase prices. Striking the right balance between original and licensed content, managing churn, and getting pricing right are all essential problems to solve for platforms trying to make the streaming business model work and find a path toward sustainable profitability.
Per Parrot Analytics’ Streaming Metrics system — which will soon estimate Netflix subscriber numbers in the absence of the company’s disclosures — Netflix’s churn in UCAN ticked down in Q2 2024. By contrast, Max and Peacock’s churn rates increased during this time. Making progress here is crucial because this region has the world’s highest APRU and is the most saturated by major streaming offerings.
Netflix’s industry leading churn figures correlate strongly with the fact that it has the highest demand for exclusive series on its platform among the major SVODs in the region. While subscriber growth is not a zero sum game, Netflix retaining more of its user base over time will help it further pull away from the struggling competition.
