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VSCompetition in the streaming industry is fierce, with content at the center of the fight for the top. Many of the biggest names in streaming have content libraries that span decades. However, netflix (NASDAQ:NFLX) is catching up after entering original content production in 2013. The company is now trying to develop franchises that compete with brands such as Star Wars and Harry Potter.
Here’s why the company’s focus on popularizing new franchises will help create sustained growth.
Demanding competition
Netflix has released its original action thriller The gray man July 22. It became the No. 1 most-watched movie on the service during the July 18-24 period. The film racked up 88.5 million viewing hours in three days, 159% more than the second most-watched film of the week, The beast from the sea. The gray man comes from the Marvel duo Anthony and Joe Russo, directors of Avengers: Infinity War and End of Gamewho specialize in growing franchises.
A few days after its launch, Netflix announced that The gray man the universe would expand with a sequel and a spin-off. The move comes as the company competes with industry leaders such as disney (NYSE: DIS) and Discovery of Warner Bros., whose content catalogs include massive franchises like Marvel, Star Wars, Harry Potter, DC, and more. Netflix is at a disadvantage in terms of content as it moves away from licensing deals and original titles become increasingly important.
Netflix’s library has shrunk by more than 35% since 2015, with a 55% reduction in its movie offerings. Meanwhile, its competitors have significantly expanded their libraries through studio acquisitions. Disney acquired Twenty-First Century Fox in 2017 for $71.3 billion, adding brands such as Avatar, Kingsman and The Simpsons to its catalog. Likewise, Amazon spent $8.5 billion in March to acquire MGM Studios, which gave Prime Video the James Bond, Rocky and Legally Blonde franchises.
Netflix would do well to make a similar studio acquisition, but the company is betting on itself to expand and establish new franchises. This is exactly what he achieved with his television series stranger things and Bridgerton. If it can do the same with movie brands, the platform will be better positioned to attract subscribers.
Drawing Subscribers
Popular franchises are one of the most powerful methods of increasing viewership. Consumers want to see additional stories for their favorite characters and have proven it time and time again. Disney has significantly expanded Disney+ by creating platform-exclusive Star Wars and Marvel series. As a result, millions of fans have to subscribe to Disney+ to follow the extended storylines.
Disney+ launched in November 2019, attracting 10 million subscribers in its first month. Less than three years later, the service has grown to 137.7 million members. For the past three years, Disney+ has offered a consistent schedule of Star Wars and Marvel series, releasing episodes week-by-week and leaving very little time between releases for fans to drop the Disney streamer. In fact, the platform’s strongest quarterly growth occurred between Q4 2020 and Q1 2021, with a 28.7% increase in subscribers. The increase came during the intense marketing campaign ahead of Disney+’s first Marvel series, Wanda Visionlaunch in February 2021.
Netflix has had similar success using popular franchises to encourage subscriber retention. After projecting a loss of 2 million subscribers in the second quarter of 2022, the company only lost 970,000 members. Addressing the better-than-expected result, co-CEO Reed Hastings said on an earnings call: “If there was one thing, we could say stranger thingsThe show’s fourth season premiered on May 27 and helped Netflix retain over a million subscribers.
And after
Netflix is on the right track in tapping Marvel legends Anthony and Joe Russo to develop an original franchise. With an audience score of 91% on Rotten Tomatoes, The gray manThe extended universe of is off to a good start. Additionally, the most-watched movie of all time on the platform is currently the 2021 action comedy. red notice, with 364 million hours of viewing. Netflix has already announced plans for two sequels as it continues to grow its library of popular franchises.
Moreover, although the following season of stranger things will be the last installment, the company has already announced a spin-off series in the works. Let’s assume the streaming pioneer can continue to pull in big numbers with planned sequels to its original films. In this case, Netflix will be in a better position to foster subscriber growth and remain competitive.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Dani Cook has no position in the stocks mentioned. The Motley Fool holds positions and recommends Amazon, Netflix and Walt Disney. The Motley Fool recommends Warner Bros. Discovery, Inc. and recommends the following options: Long Calls January 2024 at $145 on Walt Disney and Short Calls January 2024 at $155 on Walt Disney. The Motley Fool has a disclosure policy.
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