In Reversal, Netflix Discussed Selling Shows to TV Networks
By
Jessica Toonkel
March 12, 2021 12:34 PM PST
Netflix Co-CEO Ted Sarandos. Photo by Bloomberg.
Netflix has made a name for itself as the exclusive home for its original series like “The Queen’s Gambit,” “Stranger Things” and “Firefly Lane.” But in what could be a major departure in strategy, the streaming giant in recent months has explored licensing some of its movies and series to other TV outlets owned by companies like NBCUniversal and ViacomCBS, say people familiar with the situation.
The discussions indicate how Netflix, long the 800-pound gorilla in the streaming market, may be more open than previously thought to a decades-old way of making money from its programming—basically selling shows to a variety of media outlets to be aired at different time periods. This approach emphasized limited availability, unlike the streaming strategy of making every program available all the time for the price of the subscription. The streaming strategy in recent years has undermined the long-term value of programming, eroding the profitability of Hollywood.
THE TAKEAWAY
• The company has held talks with NBCU and ViacomCBS
• Talks indicate Netflix isn’t focused on keeping originals exclusive
• Unclear whether discussions will amount to deals
For Netflix, however, adopting the older approach could be a way to offset the billions it invests in programming every year. Netflix has discussed licensing older movies like its 2018 thriller “Bird Box,” which starred Sandra Bullock, to ViacomCBS’ CBS network, for example. Similarly, late last year, Netflix and NBCUniversal, which had just launched its Peacock streaming service nationwide, discussed Peacock licensing some older movies and shows from Netflix, such as the 2018 film “The Christmas Chronicles” starring Kurt Russell and Goldie Hawn, according to people familiar with the situation. Neither set of discussions led to a deal, however.
Netflix’s willingness to discuss licensing older programs suggests the company has concluded that older movies, at least, don’t help bring in new subscribers or retain old ones. That was one of the reasons Netflix began making its own shows, after years of relying on programs licensed from Hollywood studios. In 2015, for instance, Netflix’s chief content officer Ted Sarandos said on an earnings call that “the dollars invested in our original programming are more efficient in that for every dollar spent we get more bang for the buck in terms of hours viewed, and hours viewed leads to higher retention, more word of mouth and more brand halo.”
Shows that first appeared on Netflix—known in the industry as “originals”—have shown up on other services before. “Narcos,” which appeared on Netflix in 2015, ran on ViacomCBS’ PlutoTV streaming service last year. But Narcos was one of Netflix’s earlier original series and was owned by French company Gaumont International Television, which was able to license it to other outlets. Similarly, adult animated series “Bojack Horseman,” which first appeared on Netflix in 2014, ran on Comedy Central starting in 2017. But again the production company behind the show, in this case Michael Eisner’s The Tornante Company, retained the rights to license it elsewhere.
Over the past few years, Netflix has retained all rights to shows it financed to ensure they didn’t appear elsewhere. That wasn’t the case with the first series it commissioned, “House of Cards,” in 2013, which it licensed from Media Rights Capital. That series could be found on online video service Sohu with ads in China.
Both NBCUniversal and ViacomCBS own subscription streaming services that compete with Netflix. But the program licensing discussions envisaged licensing Netflix programs only to channels or streaming services with advertising. That ensured the shows didn’t appear on outlets that competed directly with Netflix, an ad-free subscription service.
ViacomCBS, NBCUniversal and Netflix declined to comment.
Netflix is way ahead of most other companies in terms of subscribers. The company has over 200 million global subscribers, including 74 million in North America. Disney+ just passed 100 million subscribers globally, of which about 40% are in the U.S, The Information has reported. HBO Max has over 17 million subscribers and Peacock has over 11.3 million monthly active accounts.
And Netflix is outspending other streaming services on programming, laying out around $13 billion a year. NBCU has indicated its investment in Peacock is about $2 billion for 2020 and 2021 combined. But Netflix said recently it was “very close” to being self-sustaining financially and no longer needs to borrow money annually to fund its operations.
That could mean Netflix may have to be more careful in its spending. In the past several months, the company has made moves to be more budget conscious, such as cutting its ad spending. Just this week, Netflix apparently began cracking down on password sharing, an issue it has never really seemed concerned about
By
Jessica Toonkel
March 12, 2021 12:34 PM PST
Netflix Co-CEO Ted Sarandos. Photo by Bloomberg.
Netflix has made a name for itself as the exclusive home for its original series like “The Queen’s Gambit,” “Stranger Things” and “Firefly Lane.” But in what could be a major departure in strategy, the streaming giant in recent months has explored licensing some of its movies and series to other TV outlets owned by companies like NBCUniversal and ViacomCBS, say people familiar with the situation.
The discussions indicate how Netflix, long the 800-pound gorilla in the streaming market, may be more open than previously thought to a decades-old way of making money from its programming—basically selling shows to a variety of media outlets to be aired at different time periods. This approach emphasized limited availability, unlike the streaming strategy of making every program available all the time for the price of the subscription. The streaming strategy in recent years has undermined the long-term value of programming, eroding the profitability of Hollywood.
THE TAKEAWAY
• The company has held talks with NBCU and ViacomCBS
• Talks indicate Netflix isn’t focused on keeping originals exclusive
• Unclear whether discussions will amount to deals
For Netflix, however, adopting the older approach could be a way to offset the billions it invests in programming every year. Netflix has discussed licensing older movies like its 2018 thriller “Bird Box,” which starred Sandra Bullock, to ViacomCBS’ CBS network, for example. Similarly, late last year, Netflix and NBCUniversal, which had just launched its Peacock streaming service nationwide, discussed Peacock licensing some older movies and shows from Netflix, such as the 2018 film “The Christmas Chronicles” starring Kurt Russell and Goldie Hawn, according to people familiar with the situation. Neither set of discussions led to a deal, however.
Netflix’s willingness to discuss licensing older programs suggests the company has concluded that older movies, at least, don’t help bring in new subscribers or retain old ones. That was one of the reasons Netflix began making its own shows, after years of relying on programs licensed from Hollywood studios. In 2015, for instance, Netflix’s chief content officer Ted Sarandos said on an earnings call that “the dollars invested in our original programming are more efficient in that for every dollar spent we get more bang for the buck in terms of hours viewed, and hours viewed leads to higher retention, more word of mouth and more brand halo.”
Shows that first appeared on Netflix—known in the industry as “originals”—have shown up on other services before. “Narcos,” which appeared on Netflix in 2015, ran on ViacomCBS’ PlutoTV streaming service last year. But Narcos was one of Netflix’s earlier original series and was owned by French company Gaumont International Television, which was able to license it to other outlets. Similarly, adult animated series “Bojack Horseman,” which first appeared on Netflix in 2014, ran on Comedy Central starting in 2017. But again the production company behind the show, in this case Michael Eisner’s The Tornante Company, retained the rights to license it elsewhere.
Over the past few years, Netflix has retained all rights to shows it financed to ensure they didn’t appear elsewhere. That wasn’t the case with the first series it commissioned, “House of Cards,” in 2013, which it licensed from Media Rights Capital. That series could be found on online video service Sohu with ads in China.
Both NBCUniversal and ViacomCBS own subscription streaming services that compete with Netflix. But the program licensing discussions envisaged licensing Netflix programs only to channels or streaming services with advertising. That ensured the shows didn’t appear on outlets that competed directly with Netflix, an ad-free subscription service.
ViacomCBS, NBCUniversal and Netflix declined to comment.
Netflix is way ahead of most other companies in terms of subscribers. The company has over 200 million global subscribers, including 74 million in North America. Disney+ just passed 100 million subscribers globally, of which about 40% are in the U.S, The Information has reported. HBO Max has over 17 million subscribers and Peacock has over 11.3 million monthly active accounts.
And Netflix is outspending other streaming services on programming, laying out around $13 billion a year. NBCU has indicated its investment in Peacock is about $2 billion for 2020 and 2021 combined. But Netflix said recently it was “very close” to being self-sustaining financially and no longer needs to borrow money annually to fund its operations.
That could mean Netflix may have to be more careful in its spending. In the past several months, the company has made moves to be more budget conscious, such as cutting its ad spending. Just this week, Netflix apparently began cracking down on password sharing, an issue it has never really seemed concerned about