Is the Netflix Juggernaut Vulnerable?

When Netflix Inc. (NASDAQ: NFLX) CFO David Wells said in February that the company would spend $8 billion on around 700 new, original projects in 2018, it’s fair to say that everyone in the entertainment business began thinking about how the company’s plans would affect every other studio and production company.

Netflix’s plan includes 80 original movies and 80 original foreign-language productions, along with a multitude of new episodes of existing and new English-language programming and one-off specials. Good news for producers, maybe not such good news for studios like Universal or Warner Bros.

Now even producers are having second thoughts, according to a report at Digiday. As a condition of funding a project, Netflix often demands either total ownership of an original series or a long-term exclusive deal. And then there’s the problem the producer’s face of getting their show noticed — and then watched — among the profusion of Netflix offerings.

Netflix typically includes marketing support for original projects, but unless a producer can demand and get a specific commitment — like, say, Ryan Murphy who recently signed a five-year, $300 million production deal with Netflix — the amount of marketing support from Netflix can be hard to determine. Digiday cites a source who has worked on Netflix marketing campaigns:

There is no transparency. Since they consider placement on the various iterations of the interface ‘marketing,’ they can tell you they’ve fulfilled their contract to you just by making sure [your show] is recommended to women between 18 to 34 who watched ‘Sex and the City’ on the Android app phone version. How the hell can you know as the talent?

That provides an opening for other media outlets like HBO and the broadcast networks to promise producers that they’ll promote the shows harder and be a better partner on contract terms. For producers whose deals don’t approach Ryan Murphy’s, that can be a compelling promise.

The other side of the coin, of course, is that if Netflix is spending $8 billion on new content it is not just going to throw it all at the wall and see what sticks. The company has budgeted $2 billion for marketing new projects this year and is aggressively seeking marketing and public relations staff to provide support.

There is no question that Netflix has been and is still changing the entertainment business. Can it stay one or two steps ahead? We’re about to find out.