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“The results reinforce existing discrepancies between large and small markets”

Industry Report: Distribution, Exhibition and Streaming

Adelaida Afilipoaie • Researcher, imec-SMIT-VUB

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The researcher explained how the production and distribution of Netflix Originals are transforming the European streaming landscape

Adelaida Afilipoaie  • Researcher, imec-SMIT-VUB

We seized the opportunity to meet with Adelaida Afilipoaie, researcher at Brussels' imec-SMIT-VUB, to discuss the ways in which Netflix Originals are transforming the European streaming landscape. In our chat, Afilipoaie covered a variety of topics including production trends, genres, formats and other industry changes brought on by the pandemic.

Cineuropa: How did you conduct your research on Netflix Original investment in European scripted series? What aspects did you focus on?
Adelaida Afilipoaie: The database of all productions labelled as Netflix Originals aggregates data for European productions between 2012 and 2020 from a variety of sources. We first consulted the Netflix Media Centre for direct communication from Netflix on new releases. Second, we collected additional information on each production on budgets, co-financing and co-producing partners from IMDb, IMDb Pro and whats-on-netflix.com and we cross-checked it and complemented it with information from various established trade journals and magazines such as The Hollywood Reporter, The Verge, Wired, Deadline, Variety, TechRadar, Digiday and Vulture that referred to upcoming European productions. We focused on five aspects: the chronological evolution based on the number of titles labelled as originals; the total volume based on minutes produced of European productions; country diversity; the collaborations that Netflix is forging; and genres.

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What are the main types of European Netflix Original investments?
The first type are licensed originals. Netflix only has distribution rights. It does not contribute to the production budget and these series are usually not marketed as originals in the country of origin.

Then we have continuation originals. Netflix has two different strategies. The first one is to acquire a licence deal for worldwide rights or specific territories and to add to the production budget after the first season is released. The second strategy, which is more common, allows Netflix to take over the production entirely either by outbidding the initial producers or by picking up cancelled titles.

Next, there are co-production/co-financing originals. These are two different types of investment but owing to the lack of data on budgets, rights, revenues and editorial control we can discuss them together. In a co-production, ownership rights are split between the producers allowing for more creative leeway, whereas in a co-financing deal, Netflix contributes financially at the initial production stage in return for worldwide distribution rights. The latter is more common in smaller markets. 

Lastly, there are full originals. Netflix commissions independent production companies to create content. Netflix owns the content entirely and the production company has no rights over the content.

What are the genres and formats on the rise in the making of European Netflix Originals?
Investments are not restricted by genre. However, there is a clear preference especially for European crime, followed by drama, and comedy series. The predominance of drama and crime genres is not surprising, as they travel best due to their narrative structure, use of stereotypes and other recognisable features. The most surprising finding was that comedy, believed to be a culturally specific genre which does not appeal to foreign audiences, was among the top three preferred genres. The comedy series were primarily hybrid genres, namely comedy-drama or comedy-romance. The data also showed a preference for youth drama and comedy series, in all investment types. Considering the formats, Netflix moves away from broadcasting conventions of 10 to 13 episodes to seasons of 6 to 8 episodes. Regarding long-form versus short-form formats, this differs between countries. For example, comparing UK and Spain, although both had approximately the same number of programming minutes, the difference in number of titles was almost double. That shows a preference for long-form for Spanish series and short-form for British ones.

What are the main market findings of your research? How did the pandemic affect these results and what can the European industry learn from them?
The results reinforce existing discrepancies between large and small markets. Production sustainability is becoming particularly difficult for European countries with less production capacity, lower investment from broadcasters, or no proven track record of international exports of content. The analysis shows a significant uptake of Netflix investment in European content. This confirms the importance of connecting to new audiences through offerings of local content, especially when entering new markets. We noticed a clear shift from licenced originals to full Netflix Originals as retaining exclusive rights is becoming even more important in the context of the ‘streaming wars.’ Next, the ‘Big Five’ (UK, Spain, France, Germany, Italy) received the highest investments both in titles and in minutes, with 30% of the productions coming from the UK. While licensed and co-financing deals provide much-needed revenue for small markets, the presence of such a strong foreign player on the market may prove to be more of a foe than a friend. Furthermore, 80% of the co-production/co-financing deals were made with pubcasters, already known as strong investors in scripted content in Europe. Also, we can say that investment in pan-European productions is almost non-existent, which is a shift from established production patterns for broadcasters and other players in Europe. Finally, the pandemic held back Netflix’s growth in 2020 in terms of new releases. Based on our database, the number of new titles would have exceeded that of 2019, as 30 titles were postponed to 2021.

How are you planning to develop your research further?
Shortly after the release of our research, we published an article titled ‘Transnationalisation revisited through the Netflix Original: An analysis of investment strategies in Europe’ which looks at Netflix’s investment strategies in European markets through the lens of transnational television theory. Moreover, with the revised 2018 European AVMSD, member states are allowed to take measures to ensure the appropriate prominence of audiovisual media services of general interest, in addition to the 30% quota for European works on VOD service providers. For the future, we plan to investigate how prominence will be implemented and measured and how effective the transpositions and new regulatory measures for the promotion of European works will be. Another topic of interest is the way data analytics, algorithms and recommendation systems are shaping the business models of on-demand platforms. 

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