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Netflix Originals Dominate Emmy Nominations -- Here's Why it Matters

By Danny Vena - Updated Mar 6, 2018 at 9:25AM

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Netflix may not have had the most Emmy nominations (yet), but the trend is yet another indicator that the streaming giant is taking over the world.

When the Emmy nominations were announced earlier this month, it wasn't a surprise that cable channel HBO led with 110 nods -- it's the 17th year in a row that the cable channel earned the most nominations. It also wasn't surprising that original content from Netflix, Inc. (NFLX 2.72%) was nominated for multiple Emmy Awards -- it's done that every year since it began producing its own content in 2013.

Netflix garnered 91 nominations, the most of any streaming service and second only to HBO. What was surprising was the sheer depth and breadth of the nominations and the fact that Netflix could soon take the crown from the cable dynasty.

Landing page for Netflix Stranger Things

Stranger Things was one of 27 Netflix originals to be nominated for an Emmy. Image source: Netflix.

Growing influence

As you can see from the chart below, Netflix has increased its nominations every year since first debuting original content. This year's nods included three for best drama series for The Crown, House of Cards, Stranger Things and two for best comedy series for Master of None and Unbreakable Kimmy Schmidt.

Year

HBO Emmy nominations

Netflix Emmy nominations

2013

108

14 

2014

99

31 

2015

126

34 

2016

94

54 

2017

110

91 

The recognition was broad based, as "The Television Academy nominated 27 Netflix original programs with 91 Emmy nominations, nearly double last year's tally" according to the company's second quarter shareholder letter.

Why it's important

There's a reason that I focus on nominations rather than awards. While the awards themselves are considered to be symbols of excellence, the process is more subjective. Not every show will appeal to every viewer, no matter how good it is. The nominations, on the other hand, can be thought of as a nod to quality. Netflix has long insisted that quality content not only leads to subscriber gains but crosses borders and language barriers. Ted Sarandos, Netflix's chief content officer addressed this in the second quarter conference call, talking about original movie Okja (emphasis mine):

So the idea, that's a fantastic story that we'll make a Korean movie for Korea, but it's even a bigger story that the movie is getting watched by the millions all around the world.

The proof is in the pudding

When Netflix reported results this week, it saw revenue that increased by 32% year over year to $2.785 billion, net income that rose 61% to $66 million, and subscribers that grew 25% over the prior year quarter to 104 million -- all in what is historically the company's slowest quarter. The company also announced that international customers account for more than 50% of its subscriber base.

These results gave Netflix additional confirmation that its strategy is working and the company vowed to continue along that path:

With our content strategy paying off in strong member, revenue and profit growth, we think it's wise to continue to invest. In continued success, we will deploy increased capital in content, particularly in owned originals, and, as we have said before, we expect to be FCF negative for many years. 

Only one gauge of success

Netflix has been nominated for scores of awards and these Emmy's are only the latest. The nominations themselves may be less important than the acknowledgment that Netflix is producing world class content.  

Taking the crown from HBO would be largely symbolic. In the end, what matters to investors is that Netflix continues to execute on its business plan and that the plan is ultimately successful. At this point, the company believes that the path to success lies in continuing to invest in quality content, and that plan appears to be working.

Danny Vena owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

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