TBI Tech & Analysis: The where & why of Netflix’s original content spend

Stranger Things

Since its move into original programming ten years ago, Netflix’s content strategy has been characterised by heavy spending, but as Omdia’s Tim Westcott and Matthew Evenson explain, that model is going to change as the streamer looks outside the US to make more for less.

After a decrease in 2021, the number of original first-run title releases on 
global streaming service Netflix in 2022 rose to 935 titles, representing an increase of 68% on the year before.

The number of original first-run hours similarly increased after a decline 
the year before, rising 82% from 1,884 in 2021 to 3,531 in 2022.

The decline in 2021 was likely driven by the reduced availability of finished titles due to the shutdown of the production sector across much of 2020, caused by the global pandemic.

An increase on 2021 numbers was to be expected, then, but the fact that there was an increase on 2020 numbers – with titles up 29% and hours up 37% – indicates that Netflix was able to achieve strong growth in production on top of recovery to pre-pandemic levels in just one year.

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Revenue & regions

The year 2022 also marked the 10th anniversary since Netflix’s first foray into the distribution of original programming, which launched with 
co-production Lilyhammer in 2012 before beginning in earnest with the
 $100m deal for an initial two seasons of House of Cards.

In this 10-year period, Netflix has released more than 3,750 first-run titles totaling over 14,000 hours. However, with the streaming (and wider industry) said to be focused on revenue growth over the coming years, it is unlikely that the strong growth over the past decade will continue into the next ten years.

Meanwhile, Netflix’s original production hours have increased from just under 1,200 in 2017 to just over 3,500 in 2022. In that period, the split between US and non-US productions has shifted from 75% US in 2017 to 38% in 2022, reflecting the streamer’s expansion of its global ambitions towards the end of the decade.

Netflix’s total original production expenditure followed a similar trend across the same period, exceeding $5.8bn in 2022 versus $1.9bn in 2017. Although the proportion of spend attributed to non-US productions has increased, it remains less than 50% of total original spend in 2022, reflecting the higher average per hour cost of premium US content compared with non-US content. As an example, season four of Stranger Things reportedly cost $30m per episode, more than the reported $21.4m cost for the entire first season of Squid Game.

This excerpt was taken from Omdia’s Online Original Production – 2022 report by Tim Westcott, senior principal analyst, digital content & channels, and Matthew Evenson, research analyst, media & entertainment, which is available to read in full here.

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