Why Netflix’s Loss of Licensed Titles Could Spark a Content Crisis
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The start of July brought another major departure from Netflix’s streaming catalog. “Criminal Minds,” the long-running CBS procedural, left the service in the U.S. on July 1, moving to Paramount+. It’s the latest high-profile loss in the streaming wars for Netflix, following such marquee titles as “The Office” and “Friends,” as the studios that licensed content to the service en masse in the 2010s reclaim that content for their own streaming libraries.
Of course, Netflix has prepared for such losses. The past decade has seen the streamer move aggressively to shift from aggregating content to lavishing billions on production and talent deals to build a vast library of original content from scratch.
On the surface, it’s been a successful endeavor. In 10 years, Netflix has amassed more than 2,000 original shows and movies (with hundreds more on the way), including numerous critical favorites, awards contenders and popular hits, with a catalog volume far eclipsing that of competitors like Disney+ and HBO Max. And as its library ballooned, so did its subscriber base — until that ascendant decade came to an end this year, when Netflix’s subscriber count dipped for the first time since 2011, triggering a massive decline in the company’s valuation.
In hindsight, it’s clear all that growth obscured a crucial fact: Many consumers have continued to use and treat Netflix like a content aggregator, despite the massive amounts of money and effort it has poured into original content.
According to the Nielsen streaming ratings for the week of May 30-June 5, the CW series “All American” on Netflix was the second most watched title on streaming, behind only “Stranger Things.” “NCIS” and “Criminal Minds” were also among the top 10. Netflix’s self-reported Top 10 list for the same week, which ranks individual seasons rather than entire series, showed “All American” season 4 at number 6, with the latest season of NBC’s “The Blacklist” at number 10.
While the Netflix Top 10 has been dominated by original series in more recent weeks, broader trends point to looming problems tied to licensed content.
Many of the most watched shows on Netflix for the U.S. in 2020 and 2021 were licensed series, according to Nielsen, with their total viewing time surpassing even massive hits “Squid Game” and “Ozark.” Those shows included NBC’s “The Office,” which was the most viewed show in 2020 with over 57 billion minutes streamed, and “Criminal Minds,” which topped 2021 with over 33 billion minutes.
As noted, both of those series are no longer available on Netflix, and more high-profile licensed shows are set to depart in the near future. “Schitt’s Creek,” which ranked among Netflix’s most watched titles in both 2020 and 2021, will move to Hulu in the U.S. in October. NBCUniversal properties “Friday Night Lights” and “30 Rock” will be removed in the U.S., and “Parks and Recreation” worldwide, after just a year on the service.
These losses are part of a sustained contraction of licensed content on the platform. Between the end of 2017 and June 2022, Netflix’s library of original shows and movies swelled from less than 300 to more than 2,100, according to data from Diesel Labs. At the same time, data from streaming search engine JustWatch shows the number of licensed titles streaming on Netflix in the U.S. shrank from more than 5,000 to about 3,700 — a reduction of almost 30 percent, even as Netflix’s overall catalog grew by nearly 10 percent.
Despite the massive output of new titles, Netflix Originals do not seem to be luring many new subscribers at this point. A recent survey by Hub Entertainment Research asked consumers what specific content enticed them to add a new streaming subscription in the past year. Of the top 10 titles cited, only one, “The Witcher,” was a Netflix Original, and the only other title on Netflix was AMC’s “The Walking Dead.”
Another recent survey, by Whip Media, ranked the top 20 titles that drove streaming subscriptions in the past year. No Netflix Originals made the list, and again, the sole title available on Netflix was a licensed series, this time being the Starz drama “Outlander.”
These surveys may well be skewed by Netflix’s maturity in the U.S. market — i.e., many of the respondents have likely subscribed to the service for years — but judging by these surveys, original content is not drawing many new subscribers.
More troubling, data suggests that existing subscribers are less satisfied with the streamer and using it less. Whip Media’s survey also found that Netflix ranked fourth among SVOD platforms in subscriber satisfaction, with a 10-point decline in satisfied users from 2021. Satisfaction in the quality of Netflix’s original series also ranked below that of Disney+, Apple TV+ and HBO Max.
Meanwhile, despite the massive viewership provided by “Stranger Things,” total streaming hours for Netflix’s top 10 titles (across all categories, including English and non-English series and movies) declined 4 percent quarter-on-quarter in 2022 and 15 percent between Q4 ’21 and Q2 ’22, according to a Piper Sandler & Co. analysis.
With more subscriber losses expected, flagging interest and satisfaction in Netflix original content should be very alarming to its leadership. The streamer has, of course, survived the exits of shows like “The Office” and “Friends,” but those departures symbolized a paradigm shift in the streaming landscape, the effects of which are only beginning to fully manifest.
And while plenty of popular licensed titles currently remain available on Netflix, such as “Grey’s Anatomy,” “New Girl” and “NCIS,” it’s uncertain at best whether they will be retained going forward. Netflix reportedly tried to hold onto “Schitt’s Creek” but lost out in a bidding war for the series.
With the streamer tightening its belt and its plan to introduce ads potentially driving up licensing costs, more losses could well be on the way. One can only surmise what Netflix’s most streamed title of 2022 will be, but if it’s a licensed show once again, the streamer may be headed for even bigger trouble.