[vanilla_nut]

Sort of? Netflix paid an upfront cost for its own content, but a recurring fee for third party content. So they try to push users to consume their content, which they'll own forever, as a bargaining chip and savings potential when the time comes to renegotiate those recurring fees.

So nobody's paying them, but Netflix effectively pays more (in the long run) to show you third party content and would prefer you watch content they produce for a one-time upfront cost.

[jedberg]

This is actually backwards. First party content costs Netflix more. They license everything the same way -- paying someone else for the content. For example, they didn't make Squid Games or Wednesday. They just got an exclusive deal for a period of time. This actually costs a lot more than licensing already existing content, because they have to pay extra for the exclusive rights and they have to pay enough to cover the cost of making it.

They push you towards exclusive content because it's what differentiates them from the competition.

[vanilla_nut]

Good point. Is it correct to say that on a long enough timescale, self-produced content is cheaper than licensed content? Or is the production cost so high that that basically doesn't matter?

Makes a lot of sense to push the content that folks can ONLY get on your platform, since that's a reason for customers to stick around. It's too bad they overdo it to the point where I actively dismiss (and get annoyed by constant promotions of) Netflix shows unless a personal friend indicates one is actually worth watching.

[jedberg]

> Is it correct to say that on a long enough timescale, self-produced content is cheaper than licensed content? Or is the production cost so high that that basically doesn't matter?

Depends on the production but it definitely isn't rule or trend. For example, look at this page with costs to make each episode:

https://movieweb.com/best-sitcoms-of-the-2000s-ranked/

Many of those are Netflix originals. What it means to be an original is that it was on Netflix first and it's the only place you can find it at first. And back in the day, that only applied to the USA (now Netflix does worldwide rights, but House of Cards for example premiered on other networks in Europe at the same time it was released on Netflix).

But once that contract expires, anyone can license it for the next go around. Generally Netflix does a long license and locks up IP rights to prevent that, but that just makes them have to pay even more for the content.

If you look at the cost per hour streamed, the originals definitely aren't the best -- stuff like a show from the 1960s that they got super cheap that ends up being super popular end up there. But the originals are the prestige items, so they're willing to be less efficient there for the unquantifiable brand boost.