Matthew Ball+ Your Authors @ballmatthew Venture investor, strategist, essayist, that guy on Twitter. Prev. Head of Strategy @AmazonStudios, ex-Otter Media, @MediaREDEF. 🇨🇦 May. 14, 2018 3 min read + Your Authors

1/ Lots of talk on Netflix's number of Originals (e.g. 700 in 2018, , 500 more by January  etc.), but it's important to understand there's no definition of an "Original" - even versus a license - and there are many different flavors

2/ The differences between these flavors is critical to understanding any statement around spend, return, engagement, expectations, growth etc.

For streaming services, there are five core categories.

3/ "True Originals" are shows a service develops, produces and releases. They control all creative, branding, budgets and renewals. They pay only the production cost.

Stranger Things is an example for Netflix

4/ "Acquired Originals" are shows developed and produced by another entity. The airing network still controls all creative, branding, budgets and renewals, but they pay "cost plus" to the originating prodco.

Netflix: The Crown, Narcos, Kimmy Schmidt (S1 was completed for NBC)

5a/ "Co-Licensed Originals" are developed and produced by another entity or network, but where specific market rights are co-licensed by another network(s) who also helps finance production (v. just paying a license on delivery)

5b/ The non-originating net has limited budgetary + creative controls, pays extra for branding rights and doesn't necessarily control renewals (i.e. can be forced to keep paying for new seasons). Here, you pay a percentage of the total production budget for specific market rights

5c/ Star Trek Discovery, which airs on Netflix everywhere but the US and Canada (IIRC), is an example here. Netflix reportedly pays 100% of the budget for this right (making the show free for CBS All Access) but doesn't really control anything about it

5d/ This is category is seeing the most growth industry wide as it allows a network to grow original programming rapidly & without taking the internal burdens of development and production. It also allows single market players (e.g. Hulu) to partner with others to afford HQ shows

6/ "Licensed Originals" are shows developed, produced and aired by other networks - but then later bought by another network for original airing in another country. This sounds like a co-license, but instead of co-financing production, you win a bid for the rights later on

7/ This makes the deal very different. There's no control over production budget, creative, release dates, renewals etc. And you might end up paying a huge share of the budget just for a few markets.

8/ Sometimes the deals even happen *years* after the show was first produced or aired in another market.

For Netflix (UK) shows like Designated Survivor (by ABC) fit this model, but are still branded NETFLIX ORIGINALS, same with Better Call Saul everywhere but the US

9/ The final category is simple: "Non-Original Licenses", such as The Office on Netflix

10/ Each of the first four categories are called Netflix Originals, but they are very different. The first category clearly is, the second makes sense while the fourth feels wrong and the third is suspect.

Fin/ That's an academic concern, but it matters a lot for outside analysis. When Netflix CFO says Originals will eventually exceed 50% of spend, what's in there v. not? When CCO says Originals are "more efficient than licenses", same question? 700 originals in 2018?

Fin 2/ This is also important for benchmarking. Only a small portion of Netflix's Originals are in #1, with most in buckets 2 and 3. This means that the average content dollar gets less product than say HBO, which has had only 2 shows in the past 15 years that weren't #1

Fin 3/ This means much of Netflix's original content spend pays other studio's margin, while HBO can reinvest that money in raising production values or another series

Fin 4/ Also important, not only are most distributors (including Netflix) selective with which shows in categories 3 and 4 are branded "Originals", each tends to have different policies/flexibilities in doing do

Fin 5/ to make more explicit, 2-4 also mean that a Netflix Original (in some markets) might be a Hulu Original (in the US) and Amazon Original at the same time

You can follow @ballmatthew.


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