Since Netflix (NASDAQ:NFLX) first began producing original entertainment, stand-up comedy has been a key element. The genre can be cheap and easy to produce, and comedians crave the promotion a partner like Netflix can give them.
The streamer has teamed up to produce stand-up specials with comedians like Dana Carvey, Aziz Ansari, and Bill Burr, and it has put comedians including Ansari, Burr, Adam Sandler, and Chelsea Handler at the center of much of its other original programming.
Netflix recently doubled down on the genre in October when it signed Chris Rock to a deal for a reported $40 million to make two stand-up specials, and it followed that up with a similar deal with Dave Chappelle, paying him $60 million for three stand-up specials.
Some analysts balked at those price tags as whole seasons of series often cost less than the sums Netflix is paying Rock and Chappelle for just two or three hours of content, but the company, which has more data than anyone else on viewer habits, seems to know what it's doing when it comes to selecting original programming. After all, Netflix has nearly 100 million viewers, and it has proprietary information like ratings and when viewers give up on series that traditional broadcasters don't. House of Cards, Netflix's first original hit show was made partly because the company knew its viewers had a penchant for the original British series, actor Kevin Spacey, and Director David Fincher's work. Unsurprisingly, the show has anchored Netflix's originals lineup ever since.
Tickling the funny bone
With Netflix's recent deal with Oscar-host and SNL alum Rock and Chappelle, whose sketch comedy Chappelle's Show garnered a cult following, the company is making an even bigger bet on stand-up. While Netflix has not directly addressed the strategy behind the move, one third-party data source shows one potential reason the company is doubling-down on stand-up.
According to a survey by Ampere Analysis across 10 countries, comedy was by far the most popular genre out of seven among viewers 18-34, with 19% of 18- to 24-year-olds and 17% of 25- to 34-year-olds listing it as their favorite genre. By contrast, older viewers preferred crime and thrillers and news and current affairs shows.
Netflix viewers also skew more toward comedy than the general population, though that trend does not hold with other streaming services. Notably, only 12% of U.S. Amazon (NASDAQ:AMZN) Prime viewers say comedy is their favorite genre compared to 18% of U.S. Netflix viewers. Unlike Netflix, Amazon has avoided stand-up comedy in its originals and has become known more for action and drama series, or true-to-life dramedies like Transparent and One Mississippi.
Netflix's viewership skews younger than traditional television, so it's important for the company to cater to that demographic. Research company Moffett Nathanson says 81% of American adults aged 18-35 now have Netflix accounts. Netflix may be reaching a saturation point with that audience at home, but young viewers remain a key demographic abroad as they tend to be tech-savvier than older generations and are more likely to be the early adopters of a service like Netflix. For instance, Netflix signed Adam Sandler to a four-movie deal in part because of his international appeal.
In order to cater to different types of viewers and tastes, Netflix will continue to offer a range of programming, and its recent big-budget release, The Crown, is a much different kind of fare than its stand-up specials. However, comedy seems to be stickier than other types of original programming, especially for its younger viewers, and it's no accident that the company is paying tens of millions of dollars to Rock and Chappelle. Chappelle is emerging from a decade-long hiatus from the public eye, and his specials should generate a significant amount of buzz for Netflix.
Expect Netflix to continue tapping the stand-up well with these kinds of blockbuster deals as the streamer is set to grow original content to 1,000 hours next year.
Jeremy Bowman owns shares of Netflix. The Motley Fool owns shares of and recommends Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.