Welcome to Hawkins. It’s a tiny town in Indiana — the setting for Netflix’s hit show, "Stranger Things." A small boy has gone missing. There’s a strange creature in the woods, flickering lights and people in the town are disappearing, one by one. The show is practically impossible not to binge watch.
Notes Robichaux, Netflix is expected to spend $6 billion this year on content, and Amazon more than $1.5 billion. Netflix is having a moment. The company released its earnings earlier this week and it beat expectations. One reason: its original programming, like "Narcos," "Orange Is the New Black," and of course, "Stranger Things." Other non-traditional media companies, like Amazon, are also benefiting from producing their own original content, which ups the ante for traditional TV and cable networks.
“Competition has gotten a lot tougher,” Robichaux said. “Not just by raising the price, but by sucking up the best talent. How many mega hits like "Walking Dead" or "Sopranos" are just floating around Hollywood? The answer is, not many.”
But more shows means it’s also harder to attract viewers. Samuel Craig, director of NYU Stern’s Entertainment, Media and Technology program said online content producers have a big leg up when it comes to building and keeping audiences.
“Netflix’s advantage and Amazon’s advantage is that they’ve got lots of consumer data that give them insight into what people want to see," he said.
Michael Inouye, a principal analyst at ABI Research, a technology market intelligence firm, said companies like Comcast and Virgin are fighting back by selling smaller packages and adding Netflix — like a channel.
But even though non-traditional media companies are on a high right now, that might not last. Making hits can be expensive, and Robichaux said it's a gamble.
“One of the reasons people love Netflix is because it’s so cheap,” he said.
The more original content they produce, the more likely it is that companies like Amazon and Netflix will have to keeping raising their rates — an idea much less popular than "Stranger Things."