Image: Suits, USA Network
Netflix began the last media earnings period of 2023 ahead of its competitors. However, there are significant questions about the worth of its vast content library and its role in driving growth in an increasingly competitive market.
Following the resolution of one part of Hollywood's labor dispute, the film industry aims to resume production by the end of the year. However, even if studios and actors settle soon, the disruption to original content will linger into 2024. Along with spending cuts by companies, this has significantly reduced the number of new content releases in recent quarters.
Less content volume will put pressure on platforms to have higher hit rates, with successful titles helping to mask the decline in new programming. Netflix, however, showed its ability to dominate pop culture without even releasing a new show, by licensing the USA Network original Suits. The series had already been available on Peacock, but its global demand skyrocketed once it started streaming on Netflix on June 17th, pushing it to a new level afterward. This highlights how increased accessibility on a platform like Netflix can drive higher awareness and demand.
Suits remained one of the most in-demand titles on the platform throughout Q3. With eight seasons available on Netflix, Suits represents the type of long-tail retention and engagement that Netflix — and its advertisers — love to see. Netflix alone, with its scale and reach, has the power to prop up older linear hits like this, in a similar way it did for Lucifer, Manifest, and You (not to mention the boost it provided to Breaking Bad years ago).
Netflix is positioned to weather a long stretch without fresh streaming content due to its minimal reliance on recently aired shows. As of the third quarter's end, only 33.8% of its TV catalog demand stemmed from shows that debuted new episodes within the past 12 months with 21.9% from the last 6 months.
This data indicates that many consumers are either revisiting old series or exploring older content they haven't seen before. Such legacy content is crucial for streaming platforms aiming for long-term success and sustainability. The company stands to continue benefitting as Hollywood re-opens its licensing market after years of consolidating programming within walled gardens. Netflix's robust collection of classic content can effectively retain a large portion of its audience, even during unpredictable events like a strike. This not only underscores Netflix's capability to benefit from its established series without incurring the costs of producing new ones but also poses a question: How sustainable is this advantage if new productions stall in the upcoming year?
