Netflix (NFLX -9.09%) made a name for itself by distributing other companies' content, but it's become recognized more recently for its original productions. The streaming service has ramped up its original content in recent years, as it's become increasingly evident other media companies will stop licensing their own content, holding it back for their own streaming platforms. Indeed, three of the biggest media companies -- Disney (DIS 0.16%), AT&T's (T 1.10%) WarnerMedia, and Comcast's (CMCSA 1.57%) NBCUniversal -- plan to do just that this year.

But licensed content remains extremely popular on streaming services. The majority of time spent streaming (56%) goes toward watching licensed content, according to a PwC survey from last month reported by eMarketer. That's in line with previous reports that the most popular shows on Netflix are dominated by licensed series.

Disney plans on pulling back all its content for Disney+. AT&T and Comcast's plans are less certain, but they'll likely keep their most popular series, like Friends and The Office, for themselves soon after their streaming services launch. There will suddenly be a lot less popular content on Netflix. Here's how it might impact the company.

A couple lying in bed watching television.

Image source: Netflix

Subscribers won't go anywhere

Though licensed content is extremely popular, it's not why most people sign up or remain subscribed to Netflix. People subscribe to gain access to exclusive content, and Netflix's marketing spend over the past couple of years has focused on its original productions to attract new subscribers.

But while people usually sign up to watch Netflix's original productions, they also enjoy watching licensed content alongside those originals. If those shows were to suddenly move to a different streaming service, it doesn't mean pre-existing subscribers would cancel as soon as they disappeared. At worst, it could leave a handful of Netflix subscribers feeling shortchanged.

It's worth pointing out, however, that 14.5% of Netflix subscribers say they're at least considering switching to Disney+. But the influx of streaming options from Disney, AT&T, Comcast, and others likely won't cause many subscribers to cancel Netflix outright. 

Management certainly isn't worried about new competition. And investors have good reasons to agree.

Can it keep its pricing power?

An exodus of licensed content from Netflix's service could leave consumers looking for supplementary sources of entertainment. Maybe they will subscribe to Netflix as well as Disney+ or WarnerMedia's service, for example. That way they can get their Netflix originals, and watch some (or all) of the 662 episodes of The Simpsons in between binge-watching the latest production from the streaming leader.

If consumers are forced to spend more on streaming video services to get practically the same amount of content as they were before with just Netflix, it could limit Netflix's ability to raise prices.

Netflix has executed several price increases over the past four years or so that have bolstered its revenue growth during that period without causing too much backlash from subscribers. And current subscribers say they're still willing to pay more than they do today. Their tune might change, however, if they have to subscribe to another service to watch their favorite reruns.

Netflix management doesn't think its pricing power will see much impact. Indeed, if consumers are primarily paying for access to Netflix's originals, the company could keep raising its prices until it's more in line with AT&T's HBO, which charges $15 per month for HBO Go.

Despite the popularity of licensed content on Netflix, the company has positioned itself and its content library for the impending shift in the industry to offer more direct-to-consumer options. As a result, investors can expect management to weather the forthcoming changes to its content library and remain relatively unscathed in terms of subscriber growth and pricing power -- the two main ingredients in its continued revenue growth.