Netflix’s quarterly shareholder letter, released overnight, contained lots of new information. But one section in particular stood out:
“Looking at our original content performance over the last few years, there have been so many impressive aspects…
But there is one real shocker; last year our original content overall was some of our most efficient content. Our originals cost us less money, relative to our viewing metrics, than most of our licensed content, much of which is well known and created by the top studios.”
(The emphasis is Netflix’s).
Here’s why that statement matters: That it is cheaper to produce content than license it substantiates the company’s decision to shift into original content, which was considered very risky at the time.
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