DTVE Data Weekly: Analysing the long tail of Netflix viewing

Netflix is more than simply a service operating over the top of broadband to rival traditional linear TV: in many cases, it is a default entertainment option. Its confidence in embracing advertising is growing as the importance of distinguishing itself from linear TV decreases.

Source: Omdia

Netflix’s growing confidence is manifested by the release of its first What We Watched dataset, showing 99% of its total viewing for the period between January and December 2023, a total of 183bn hours. By releasing this data, Netflix is showing the depth of its content library, having already released top-10 charts showing its most viewed titles.

Furthermore, as Netflix seeks to funnel users to its ad-supported tier subscriptions, the data also provides potential advertisers with more confidence about its audience reach. Netflix will use the accepted currency of Nielsen and others to sell ad sales, but What We Watched provides a new layer of transparency and offers insight into popular content for brands seeking paid placement opportunities. This approach also shows a commitment to transparency at a global level without the need to engage on the same terms as through traditional ratings agencies.

Data transparency was a key area of dispute in the 2023 writers’ and actors’ strikes. Unions wanted to use an independent source to measure viewing of their shows and calculate residuals. The release of this data allows some of that pressure to be released on Netflix’s own terms.

A case in point: Pinkfong & Baby Shark’s Space Adventure is available on YouTube, where it has 12.5m views. In the six-month period between January and June 2023, the film was viewed for the equivalent of 20m times its total runtime on Netflix. Rather than Netflix bringing YouTube content to a more limited audience, in this case, the viewership achieved by Netflix was larger than on YouTube. This pattern underlines how Netflix is seeking to prevent churn through, in this example, rewatchable children’s content and, on a grander scale, the company’s capacity to compete with largely free platforms such as YouTube in the medium term.

Content spending

One key aspect of this data is that it also underlines the company’s strength of international production and viewership, helping to partially assuage investor fears about the potential impact of future industrial action. At a time when other studios are under pressure from investors about financial losses from their streaming businesses, the data release was a show of strength that other competitors were unable to match.

In this vein, Netflix wants to show it can deliver with lower original content spending and provide audiences to content sellers. The first quarter of 2023 had one of the lowest total original content spends in Netflix’s recent history, and strike action further restricted content spending later in the year. Netflix’s estimated total content spend in 2023 grew by just 6.7%, and original content spend fell from 2022, according to Omdia.

Source: Omdia

It makes sense, therefore, that Netflix’s decision to release this viewing data also helps underline that the company’s future profitability can be achieved in an era where content spend increases may be more limited. Netflix’s subscription growth potential is already reaching its limit in some of its most advanced markets, with numbers growing unsustainably because of the crackdown on password sharing. Therefore, sustainable potential revenue growth must promise increases in ARPU or reductions in cost.

What the data does not tell us

Equally, the limitations of the Netflix What We Watched data should temper our expectations about what the data can tell us. One of these aspects is that this data cannot tell us where people were watching Netflix’s shows and cannot yet show us how some of these viewership trends changed over time. If and when Netflix releases a new set of data, we will have more information on this.

Additionally, a key pillar of Netflix’s advertising program is likely to be its ability to reach a different range of audiences from traditional linear TV; this data is not broken down by gender, age, or other demographic categories, so our insight on that front is limited. The data does provide insight into the content consumed but does not provide any avenue for looking at what content was served or promoted to users.

Finally, this data does not show us 100% of viewing on Netflix, and it is likely that many less-watched titles— estimated to be around 7,800—were not included in this report despite the fact that around 20,100 titles were included in the data.

What the Netflix data does show us

Netflix is both a supplier and a producer of content at a global level, and this viewership data allows us to see where substantial asymmetries exist between where content is produced and where it is consumed. The US is the largest provider of both content and subscriptions. Although 57.7% of Netflix viewing in this period was of US titles, just 28.9% of subscriptions as of end-1Q23 were from the US.

This relationship is unsurprising, but it is worth remembering that 60% of Netflix’s subscription count now comes from markets where English is not the primary language, and Netflix represents an accessible source of American content. South Korea has rapidly become Netflix’s most important content export market. In this period, 8.7% of Netflix’s total viewership came from South Korean shows, and just 3% of the company’s subscriptions came from the peninsula. In June 2023, Ted Sarandos underlined the broad appeal of Korean shows by remarking that 60% of users worldwide had watched at least some Korean content.

English-language viewing was also less concentrated around top titles than viewing in other languages. The top 10 English-language titles accounted for 4.7% of all viewing on the platform. In turn, the top 100 English-language franchises (grouping series, sequels, and spinoffs under a single name) accounted for just 16.5% of the total viewing on the platform. The fact that almost 85% of Netflix viewing does not come from the top 100 English franchises underlines the importance of Netflix’s back catalog and non-English content.

English was the most popular language across five of Netflix’s six most popular content categories: scripted (which includes drama and comedy TV series), film, unscripted, animation, and documentary. Korean was the second most popular language in scripted and unscripted, and Hindi was the second most popular language for film content. Content originally in English accounted for just 65% of the total viewing of scripted series and 75% of the total viewing of unscripted titles. Spanish-language content was the third most popular original content language for each of film, scripted, and unscripted.

In the past two years, Netflix has continued to diversify its business model, adding new revenue tiers, changing pricing structures globally, and engaging in new forms of bundling. The company is now in a position where it must serve many goals and audiences simultaneously, and the diversity of content that it provides and that audiences consume is a testament to that. This data underlines how Netflix has found a more stable recipe for local content than rivals such as Amazon Prime Video or Disney, which have been forced to strip back their content offerings in places such as Turkey and subSaharan Africa.

Daoud Jackson is senior analyst of media & entertainment at Omdia. The full report is available here.