Netflix already offers games, and now it is seriously considering something else. There is a slight optimism among investors
Netflix replicates a proven model from the video market. On the one hand, it orders its own productions from recognizable hosts and bands. On the other hand, it licenses existing hits from networks and publishers. This mixture has a fast effect build a catalog that will have weight felt by algorithms and users.
The core of the plan is to acquire full rights to the video versions of many well-known programs, while leaving the audio and shorter clips in wide circulation. The talks include, among others: with Spotify, iHeartMedia and Sirius, and the agreements cover dozens of titles.
Lesson from the past: fitness and interactive content
A few years ago, Netflix tested fitness contentamong others via Nike library license. The program did not surprise and was turned off. The conclusions from these activities will be very important for podcasts. Firstly, too small a volume will mean that many users will not even notice the new category. Secondly, the narrow, although loyal, audience is too small for the algorithm to start recommending the format widely to other people. That's why the goal is large scale from the start and highlighting podcasts in the interfaceso that they do not lose to TV series and films.
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At the same time, Netflix intends to “refurbish” its mobile application. The changes are not exclusive to podcasts, but are intended to help the new category break into the audience's awareness. The plan includes better exposure of video podcasts in feeds and recommendation results, as well as introducing vertical materials that naturally correspond to habits from social media platforms.
It is important that video podcasts look and behave differently in the application than other content – so that the algorithm does not condemn them to the “bottom of the shelf” just because they start with a smaller viewer base.
A low-cost, but well-thought-out experiment
Unlike the astronomical contracts in the world of podcasting, Netflix is entering this sector cautiously. Most contracts are annual tests, often below $10 million. – Bloomberg reports. It's about checking how users engage with video podcasts, whether they return every week, retention and viewing time.and whether it is possible to stop the outflow of creators and content to YouTube.
At the same time, the company has not yet appointed a single head of podcasts. Two existing divisions are responsible for the moves: the licensing team led by Lauren Smith and the unscripted/live division led by Brandon Riegg. Licensing is being considered to be strengthened by a new leader, but for now Netflix is using existing structures.
For podcast networks today, it is more of an investment in reach than in cash. The deals are not a golden deal from day one, but Spotify, iHeart and Sirius hope that exposure to Netflix's audience will increase the value of their formats in the next several months. For Netflix, podcasts are a way to expand its offer with cheaper, regularly published content that can fill the weekly rhythm of media consumption. This is important because podcasts, like WWE Raw broadcasts or the planned Star Search, appear weekly, not in bulk, like typical Netflix series.
From declaration to action
Interest in podcasts on Netflix didn't come out of nowhere. Previously, the platform mainly financed titles supporting the promotion of its films and series. This year, the company's co-CEO Ted Sarandos started talking about podcasts as a full-fledged genre, alongside sitcoms and live sports.
Initially, even purchasing exclusive rights to the largest brands, such as “Call Her Daddy” Alex Cooper, was considered, but the prices turned out to be prohibitive. For comparison, SiriusXM paid over $100 million for distribution and advertising, and the program is still not fully exclusive. Netflix's tactics are therefore more pragmatic and mean less prestige, more tests and quick validation of hypotheses.
Netflix shares are up 1.63% today. They are up 25% since the beginning of the year.
