Netflix Global Content Strategy May Not Pay Off as Hoped

With a resolution to Hollywood’s dual strikes still looking far off, most analysts and commentators seem to agree that Netflix is extremely well positioned to weather the current labor unrest. That’s due in no small part to the streamer’s robust international pipeline, which will keep content flowing from countries outside the U.S. guilds’ jurisdiction.

Yet a closer look at the results of Netflix’s increasingly global content strategy thus far reveals that’s no guarantee. While a dwindling supply of new American titles could certainly push users to watch more international programming — as the production shutdowns of the early COVID era did back in 2020 — the core of the streamer’s global business remains, for now at least, English-language series produced in the U.S.

Indeed, nearly two years after the South Korean thriller “Squid Game” burst onto the global stage, not only has season two yet to arrive, but Netflix has yet to produce an international hit that comes anywhere close to matching its success.

The streamer’s English-language series, meanwhile, have continued to resonate globally. Last year, according to Netflix’s “Top 10” reports, “Wednesday” and “Stranger Things” were both among the service’s most watched shows in more than 90 countries, viewed for more than 1.5 billion hours in their first 91 days of release (Netflix’s new window of choice for measuring all-time popularity on its platform).

Of course, they also fell considerably short of “Squid Game’s” 2.2 billion hours viewed, but no non-English TV season has come remotely close to striking distance, either. Netflix’s second-most-successful non-English season, the Spanish crime drama “Money Heist” Part 5 (released in 2021), clocked about 900 million hours viewed in its first 91 days — less than half the “Squid Game” total.

In short, despite projections of a newly globalized content market in the wake of “Squid Game,” truly global blockbuster TV hits from outside the U.S. have remained a rarity.

In and of itself, this isn’t necessarily a problem, given the success of Netflix’s U.S.-based series (though the streamer has struggled a bit to produce blockbuster originals this year across the board). And the streamer can’t expect a “Squid Game”-size hit every single week, can it?

Except, co-CEO Greg Peters’ stated goal is to move toward “mak[ing] ‘Squid Game’ not an unusual thing but basically something that happens literally every week.” It’s unclear whether this strategy is in early stages and needs more time and investment to succeed or is simply not succeeding. But at this point, it seems “Squid Game” was more of a unicorn than an easily replicable phenomenon — in other words, Netflix is being faced with the age-old Hollywood lesson that you can’t just consistently crank out hits.

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Meanwhile, the company has been ramping up spending on international content, with significantly greater sums going toward local productions in various regions. Last year, for instance, Netflix announced it had doubled its budget for German-language content to half a billion dollars between 2021 and 2023, and it plans to invest $2.5 billion in Korean programming over the next four years.

The increasing spend is visible in Netflix’s catalog: According to a recent study by PlumResearch and Omdia, the share of all available Netflix originals in the U.S. that were produced stateside dwindled over the past six years from around 60% to 40%.

Netflix argues its goal for local content is to make shows that should primarily work in the market for which they were made. “We don’t make global shows. We make local authentic shows in every country, and they’re on a global platform,” chief content officer Bela Bajaria said last month. “Other people may find them and love them, and they’ll connect with a global audience. But we really make local shows on a global platform.”

Yet local content has apparently failed to make a significant dent in many countries. In PlumResearch and Omdia’s study, no surveyed country besides South Korea and the U.S. had locally produced originals account for more than 50% — or even 20% — of total original content viewing time on Netflix in Q1 ’23. In Germany, for instance, local originals made up less than 3% of that time.

The upshot of this is that Netflix’s global content strategy is currently yielding neither massive global hits nor significant local success in many markets. The German top 10 for any given week is typically dominated by American originals and licensed series, with German titles rarely topping the list.

However, Netflix’s investment in Korean content is still paying big dividends … in Korea. While local content made up just 5% of the Netflix originals available in South Korea as of Q1, those titles accounted for a whopping 68% of the country’s time spent watching original content on the service that quarter.

What this means for the streamer, broadly speaking, is that there is no one-size-fits-all global content strategy, whether it’s aiming for universally appealing international hits or investing heavily in localized productions for each individual country. Instead, Netflix will likely need to take a more targeted approach, putting money into local content where it resonates and easing up on such spending elsewhere.

As for the strike-related implications, that 40% of viewing time U.S. users spent on international originals in Q1 indicates there is indeed still an appetite for such content in the domestic market. But as Hollywood’s work stoppage wears on, Netflix may not be able to lean on that demand quite as heavily as its leadership would like to believe.