Please ensure Javascript is enabled for purposes of website accessibility

Netflix Doubles Down on "Stranger Things"

By Danny Vena - Oct 4, 2019 at 8:09AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Fans will get another season of the streaming giant's fan-favorite show -- and the creators get a big payday.

Earlier this week, Netflix (NFLX -3.78%) investors and Stranger Things fans got the news they've been waiting for. The breakout hit show, which combines elements of horror with 1980's nostalgia, was just renewed for a fourth season.

That's not all. Brothers Matt and Ross Duffer, the creators and show runners of the hit program, have agreed to a multiyear film and series deal that will keep them producing new programs for the tech giant for the foreseeable future. 

A teenage girl laying on a bed smiling and talking into a walkie talkie.

Millie Bobby Brown in a scene from Netflix original Stranger Things 3. Image source: Netflix.

Continuing its flagship series

Stranger Things is widely regarded as the streaming giant's most popular original program, so it's no surprise Netflix would be eager to lock down its architects. When the third season premiered in July, Netflix tweeted its success, saying the program had a record-breaking debut. The show was watched by 40.7 million household accounts during its first four days of availability, "more than any other film or series." Even more incredibly, a whopping 18.2 million fans had already devoured the entire season. 

We don't have to take Netflix's word for it when it comes to the ongoing success of Stranger Things. Review aggregation site Rotten Tomatoes declares the show "Fresh" -- a designation it bestows if an entry achieves a rating of 75% or higher with 80 or more reviews. The program has easily surpassed those benchmarks, with the first three seasons attaining scores of 97%, 94%, and 90% respectively. 

Other sources have crowned Stranger Things Netflix's most popular show. Nielsen reported that the show reached 26.4 million unique viewers in the U.S. during the first four days of its release, with 824,000 completing the entire series. That was a 56% increase compared to the second season, making it the most watched Netflix original Nielsen had ever evaluated. 

Content demand measurement company Parrot Analytics said earlier this week that Stranger Things 3 remained the No. 1 most watched digital original series in the U.S. -- across all streaming platforms -- a position the show has held for 14 consecutive weeks.

The show has also been a critical success, garnering 30 Primetime Emmy nominations that resulted in six wins. 

Building its talent pool

Netflix not only renewed the show but inked a multiyear, nine-figure deal with its creators.

Over the past several years, Netflix has embarked on a strategy of signing exclusive content deals with top writers and producers. The company recently signed a $200 million deal with David Benioff and D. B. Weiss -- of Game of Thrones fame -- to bring them to into the fold.

This follows similar nine-figure deals over the past few years with known hit makers like Shonda Rhimes (Grey's Anatomy, Scandal, How to Get Away With Murder), Ryan Murphy (American Horror Story, Glee, American Crime Story: The People v. O.J. Simpson), Kenya Barris (Black-ish, Grown-ish), and Jenji Kohan (Orange is the New Black, Weeds).

A woman with a apprehensive look standing on the sidewalk as throngs of people stream by her on both sides.

Taylor Schilling in a scene from Netflix original series Orange Is the New Black. Image source: Netflix.

A method to its madness

While some would question the wisdom of these moves, Netflix has a clearly defined plan for the future. The company has stated, "Our future largely lies in exclusive original content that drives both excitement around Netflix and enormous viewing satisfaction for our global membership and its wide variety of tastes." 

There's evidence to suggest the strategy is working. According to Morgan Stanley's ninth annual streaming video survey, 40% of respondents cited Netflix as the best destination for original programming in 2019. Asked to give the top three reasons they subscribe to the service, a whopping 58% of Netflix viewers cited "its broad selection of content," 55% said the company "adds content I like," and 53% said it was the "good original programming." 

This leaves little doubt as to why Netflix is casting a wide net when it comes to original programming and spending like a drunken sailor to lock up the content creators.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Netflix, Inc. Stock Quote
Netflix, Inc.
$171.62 (-3.78%) $-6.74

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.