Wall Street has rewarded Netflix’s large investments in creating original content. But Netflix has not always gained acceptance from the traditional content arbiters, as we saw when the Cannes Film Festival scoffed at Netflix’s Festival entry in 2017. But the tide appears to be turning if the Emmy Awards are any indication. Consider:

  • Netflix secured more Emmy nominations than HBO for the 70th Prime Time Emmy Awards, which were telecast September 17. Going into the ceremony, Netflix was nominated for 112 categories versus 108 for HBO – breaking HBO’s 17-year streak of being the most Emmy-nominated network.
  • As was widely reported, by the end of the evening, Netflix tied HBO with 23 Emmy wins, thus ending HBO’s longstanding dominance of the Emmys.

To put these achievements in perspective: Netflix didn’t even start streaming original content until 2012, when it premiered House of Cards. And the more Netflix invests into content, the more Emmy nominations it achieves, rising from 54 noms in 2016 and 91 in 2017.

Netflix has reason to celebrate, but not for long. The company faces strong threats, among them:

  • Amazon’s slow but undeniable growth as an entertainment company. Amazon has racked up its own share of critical acclaim, with its The Marvelous Mrs. Maisel winning eight total Emmys (five during the regular telecast). And Amazon has something Netflix lacks: the ability to cross-sell its original programming via Prime memberships.
  • A finite number of viewers. Netflix’s stock took a beating when its latest quarterly earnings reported a lower-than-expected increase in membership numbers. As noted recently in Marketwatch, Netflix might be approaching a ceiling for its audience viewership, which, if accurate, puts Netflix in the undesirable position of needing to rely on price increases and new revenue streams to wring more value out of its existing audience. But Netflix is still expanding globally especially in large markets such as India.

So far the Netflix story is about audience growth, financial reward, and critical acceptance. Will a slowdown in audience growth upset the narrative? This is an important question. The ability to invest in Emmy-caliber content depends on continuing to attract viewers. We’ll find an answer when Netflix next reports its earnings.

Saul Delage

Saul Delage

VP Growth