Netflix (NFLX +0.34%) is always quick to issue a press release when it buys the rights to new top-notch content. In 2013 its highest-profile new content initiative was its foray into original programming. Shows like the Emmy Award-winning House of Cards, the resurrected Arrested Development, and Orange Is the New Black have garnered plenty of accolades for Netflix.
However, high-quality content is expensive, and stepped-up competition with services like Hulu and Amazon.com's (AMZN +0.53%) Prime Instant Video are driving up content costs even more. This has forced Netflix to make some tough choices about where to cut content in order to free up money for original content and other new licensed programming.
Netflix has had to cut some titles in 2013 to free up money for other content investments
So while Netflix added some pretty impressive TV shows to its offering in 2013, it also had to cut some of its top titles. (Indeed, Netflix is constantly adding and removing movies and TV shows from its service.) Here are four top titles that have been removed from Netflix in 2013.
Law and Order: SVU
While the most popular spinoff of the long-running Law and Order franchise is well past its heyday, it still has plenty of fans. Plus, with more than 300 episodes, it's a perfect series to keep binge-watchers happy for months (or years).
According to a third-party analysis of Netflix viewing, Law and Order: SVU is the No. 13 show on Netflix in terms of viewing this year -- right behind originals House of Cards and Orange Is the New Black. However, it won't keep that spot for very long.
That's because the first seven seasons of SVU were removed from Netflix this spring, after Netflix didn't renew its licensing agreement with Comcast. Some later seasons are still available on Netflix because they're covered by a different licensing agreement. Even those seem likely to disappear eventually, because it doesn't make sense to license half of a TV series.
South Park
Animated comedy South Park also made the top 20 list for most-viewed programming on Netflix in 2013. That's fairly impressive, considering that all 15 seasons of the show were removed from the Netflix U.S. service in late May.
The removal of South Park seems to be related to the expiration of a broad content licensing agreement between Netflix and Viacom (VIAB +0.00%). In April, Netflix claimed that it was interested in renewing some of its expiring Viacom titles, but it couldn't reach a deal with Viacom. Many of those shows went to Amazon Prime instead.
SpongeBob SquarePants
SpongeBob SquarePants was one of the popular Viacom shows that Amazon poached from Netflix earlier this year. In fact, that deal gave Amazon exclusive access to several Nickelodeon children's series that had previously been on Netflix, including SpongeBob and Dora the Explorer. Several of Netflix's recent content deals have been designed to rebuild its selection of children's content.
Netflix still has a pretty good kids' offering, but by losing to Amazon for Viacom's Nickelodeon content, it risks being overtaken as the top video streaming site for kids. New content is just one way that Amazon is targeting children's entertainment; the Kindle FreeTime Unlimited service aims to win over parents with specially curated books, games, educational apps, and TV shows, all accessible through a Kindle Fire tablet.
Downton Abbey
Last, but not least, popular period drama Downton Abbey left the U.S. Netflix service at the end of June. Once again, Netflix had to remove this content after losing to Amazon in a bidding war for exclusive rights to the show.
Downton Abbey is exactly the type of show that thrives on Netflix -- a popular, high-quality serialized drama. Downton Abbey has been dominated for dozens of Emmys through its first three seasons, with several key wins. Meanwhile, the show's U.S. audience has grown strongly over time; last season, it averaged 11.5 million viewers, up about 65% compared with the prior year.
The loss of Downton Abbey could be particularly tough for Netflix for the next several months. The fourth season will make its debut on PBS in early January, so many fans may be looking to catch up on old seasons around now. Last year, they could have done so on Netflix; now, they will need to sign up for an Amazon Prime account.
Foolish conclusion
Could Amazon still win the streaming war?
Netflix has added some top-notch shows to its content arsenal in 2013, including several highly acclaimed original series. However, given the extent of content cost inflation and the expense of licensing original content, Netflix has had to make some tough choices about where to cut content.
Law and Order: SVU, South Park, SpongeBob SquarePants, and Downton Abbey are four of the better-known shows to be dropped by Netflix in the U.S. during 2013. So far, the company doesn't seem to have suffered any ill effects from losing this content: Subscriber growth remained healthy last quarter.
However, over time, there is some risk that customers will get fed up with seeing their favorite titles removed from the service. Netflix may need to increase its content budget even further in 2014 and beyond in order to retain its clear lead in the streaming market.
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