Media streaming veteran Netflix (NFLX 2.38%) was better prepared for last year's Hollywood strikes than most media companies. In fact, the company's global production network makes it fairly immune to strikes and other filming slowdowns in any particular place.
A hypothesis in search of helpful data
That was my hypothesis. Surely, Netflix's current schedule must be packed to the gills with foreign productions, a few months after the Writers' Guild and Screen Actors' Guild ended their respective strikes. Right?
Well, a hypothesis without data is like a movie without actors -- just some hot air blowing across an empty screen. On the other hand, I don't have access to tons of data and a huge staff ready to mine insights in that hypothetical trove of information. So I settled for the next best thing, spending an hour or so with the best publicly available info I could find.
More specifically, I looked into how many of the titles on Netflix's current top-10 lists of movies and shows are true originals, and what portion of those names was produced abroad. Then I did the same for the year-ago versions of the same lists.
The results weren't exactly what I expected, but I do think they support my hypothesis just fine.
NASDAQ: NFLX
Key Data Points
What I learned from a quick review of Netflix shows
Shows are more important to Netflix than movies. Serial content keeps viewers engaged longer, whether they binge-watch or go through the material more slowly. The top-rated streaming movie in the latest available ranking from Nielsen Media only ranks seventh overall, nestled within nine streaming series.
So I wasn't surprised to see 10 true Netflix originals in today's ranking of the 10 most popular shows. There are no licensed titles from other production companies here, and no rehashed hits from yesteryear. Sure, you'll find a few new seasons of long-running shows such as Formula 1: Drive to Survive and Love Is Blind, not to mention the unique Screen Actors Guild Awards show, which Netflix started live-streaming in 2023. But it's all fresh Netflix original content, all the time.
Furthermore, only three of the leading shows today were produced on American soil, and that includes the SAG Awards. Avatar: The Last Airbender and Resident Alien were filmed in Canada. One Day and Can I Tell You a Secret? are British productions. Warrior takes place in San Francisco but the filming actually happens in Cape Town, South Africa. Formula 1 jumps between various race tracks and team headquarters around the world, and The Tourist is covered in thick layers of Australian dust.
The three American titles are an awards show, a single stand-up comedy special, and a romance-themed reality show. Those reality shows are more scripted than they look, but I'm still not talking about heavy-hitting scripted drama with an ensemble cast of card-carrying Actors' Guild members.
Here's the thing, though -- the post-strike situation really wasn't very different from the 2023 version of the same week. That list showed two titles licensed from other studios and six Netflix originals filmed overseas. In other words, the company didn't need to change its publishing strategy by much. Most of the hit shows were filmed far away from Hollywood's sound stages anyway.
Image source: Getty Images.
One more reason to own Netflix stock
Mind you, Netflix tends to dominate the Nielsen ratings with or without the influence of Hollywood strikes. Nobody outspends Netflix in terms of production budgets, and the company has a reputation for working well with independent creators. That's the real secret sauce behind Netflix's ratings success.
But it sure doesn't hurt to have a uniquely flexible production network with hit-making nodes in places like South Korea (Squid Game, Extraordinary Attorney Woo), Spain (Money Heist, Elite), and Canada (Anne With an E, Kim's Convenience). It gives the company the option to adjust production schedules based on shifting costs, available talent, and the global zeitgeist. And while management was initially surprised to see how well local productions traveled around the world, border-crossing hits are par for the course now.
So international production is just one more competitive advantage in Netflix's bulging toolbox. There are many chapters left to read in this worldwide growth story, and Netflix remains my largest stock holding in 2024.
