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A Look at Netflix’s Programming Strategy

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Programming strategy

In the upcoming earnings on July 18, Netflix could announce some information on how much it intends to spend on its programming in 2016. Besides acquiring rights to movies, Netflix (NFLX) is producing original content. Netflix has stated that it plans to spend $5 billion on original programming in 2016 and over $6 billion in 2017 on a cash basis. Netflix also intends to spend 5% of its content spending on original movies.

Early this year, Netflix stated in an interview with Benjamin Swinburne from Morgan Stanley (MS) and Peter Kafka from Recode that it doesn’t want to be known only for its adult dramas and comedies. It also wants to be known for its programming intended for the family as a whole.

In June 2016, the Wall Street Journal reported that Netflix will stream Activision Blizzard’s (ATVI) animated television series Skylanders Academy for two 13-episode seasons.

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Earlier this month, the company also entered into a content licensing agreement with CBS (CBS). Under the terms of this agreement, Netflix will remain the exclusive SVOD (subscription video on demand) service for earlier seasons of television shows broadcast on The CW Network. The CW Network is a joint venture between CBS and Time Warner’s (TWX) Warner Bros. network. Beginning with the 2016–2017 broadcast season, Netflix subscribers will be able to stream full seasons of shows from the CW Network eight days after the broadcast of the show’s season finale.

Netflix explores different genres of programming

Netflix has ruled out specific news-based shows that involve news gathering, as it doesn’t foresee such shows fitting into its streaming business model. Netflix is exploring new content types because it wants to boost its subscriber base by providing varied programming to its users.

As the chart above indicates and according to a Statista report citing a GfK report from May 2015, the most popular television programming genres in the United States remain sitcoms and comedies.

The company’s kids programming is also enjoying rising popularity. At a UBS (UBS) conference in late 2015, Netflix stated that, according to its internal data, around 50% of households subscribing to Netflix on a global basis are watching kids programming regularly. The company is producing around 35 original series for kids.

Keep reading for a discussion of Netflix’s competition.

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