What Will The Reduction In Spending On Original Content Mean For Netflix?

In 2022, Netflix decided to limit the amount of money they spend on the production of their original series and movies. But what effects will this reduction have on the catalogue of Netflix and its users?

Here we will explain why Netflix started this cost reduction and shed some light on its possible effects on the platform.

Netflix and Its Bad 2022

It is no secret to anyone that 2022 was a very rough year for Netflix. After two good years of success, the platform lost almost one million subscribers during April and June.

According to Netflix, the loss of subscribers was due to the increase in subscription fees and the rise of other streaming platforms.

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Netflix and Amazon Prime have remained as the biggest streaming platforms for a long time. But this changed in 2019 when Disney and Warner Bros announced their Disney+ and HBO Max streaming media.

The launch of these platforms ended up being a heavy blow for Netflix. The platform would not only lose all the content related to Disney, Marvel and Warner Bros. But they would also gain two new strong rivals in the streaming market.

Exclusive content wasn’t as much of a necessity in the early days of streaming. However, as more and more traditional channels like Paramount and HBO have entered the scene, they’ve taken the content they produced for cable away from Netflix, who held the streaming rights. Now, Netflix has to pay to produce exclusive content that allows them to stand out.

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One of the most significant losses that the company took last year was the removal of the Marvel series produced by Netflix itself.

Rises And Restrictions

Another factor that affected Netflix subscribers was the sudden rise in prices. In 2022 Netflix increased the prices of all its subscription plans worldwide.

In the UK, the essential Netflix package rises to £6.99, the standard tier to £10.99 and the premium tier to £15.99 per month. Netflix also announced a new “ad tier”, which would work just like its basic package but with ads and the old price of the basic package.

The platform also began to restrict password sharing in Latin American countries and is expected to start doing it worldwide in 2023.

Netflix And Its Big Expenses

Until now, Netflix has been one of the biggest producers in the streaming industry. Last year only, the company paid 30 million USD on each episode of the fourth season of “Stranger Things”.

Stranger Things wasn’t the only expensive production that Netflix made last year. The fifth season of “The Crown” also cost $13 million per episode while “The Get Down” had a cost of $11 million per episode.

Of course, these costs were nothing on the $18 billion budget that Netflix had, but things might change in the following years.

What Will Happen To Netflix?

The massive loss of subscribers and the decrease in the stock market have forced Netflix to put a brake on a budget for original productions. The company also closed various offices worldwide and laid off hundreds of employees.

The reduction in the production budget puts Netflix in an awkward position, as they need exclusive content that can compete with Disney+ and HBO Max. If more subscribers leave the platform, Netflix will have to focus on what series or film gets produced and what series get another season.

Another decision that Netflix could take is to change how their newest series are released on the platform—launching each episode weekly as Disney+ does instead of launching all the episodes simultaneously.

We will have to wait this year to see whatever happens with Netflix. The platform ended 2022 on a sour note, with “The Witcher: Blood Origin” receiving the worst scores possible from fans and critics.

But not everything was terrible. Netflix also had many successes during the last year, like “Cyberpunk: Edgerunners”, “Stranger Things”, and the “Pinocchio” film by Guillermo del Toro.