That 72% sounds bad until you look into it, then it looks worse

As we've been  over before, the only halfway credible narrative that anyone has come up with to justify the stock price of Netflix is that it will produce so much valuable content of such long-term value that the company will not only be able to survive without the support of the studios, but will completely dominate them. Even if the studios had been able to stop Netflix at one time, the company has too much momentum now. At least that's the story.

If you go by the hype (paid for by unprecedented marketing and PR budgets), it's easy to believe that Netflix originals dominate the platform. That's not the case.

From Gizmodo [emphasis added]:

At a tech and media conference on Tuesday AT&T CEO Randall Stephenson said that the company will yank WarnerMedia content from other streaming services so that the assets will be exclusive to the streaming service his company is launching soon. That would mean that Netflix would lose popular shows like Friends and Hulu is going to lose audience favorites like ER.

... 

“Pulling it away (from Netflix)? It’s certainly something we’re willing to do,” Reilly said, according to Deadline—adding that he doesn’t think sharing assets is a good model and his “belief is that they should be exclusive.”

The move would be a major blow to Netflix. The company paid $100 million for exclusive streaming rights for Friends through 2019. Analytics firm Jumpshot showed late last year that Friends was the second- or third-most watched show on Netflix. And, as Wall Street Journal highlighted, 72 percent of Netflix viewers’ watch time is spent on non-original content, much of which is owned by WarnerMedia. The move would only add to Netflix’s incoming difficulties with the launch of Disney’s new streaming service. A recent survey conducted by Hollywood Reporter and Morning Consult showed that 28 percent of Netflix users said they would cancel their account if Disney pulled all their titles—including Marvel and Star Wars properties—from Netflix.

And that 72% understates the problem. Apologies to the regulars who have heard this before, but from an intellectual property standpoint, Netflix Originals range from complete ownership to licensing agreements where the company get no longterm rights whatsoever.

While we can't know the exact details of the contracts, it's unlikely that IP based companies like Disney or Mattel would let go of properties like Luke Cage or She-Ra. Furthermore, in addition to She-Ra, most of Netflix's other prominent kids' shows appear to be owned by studios like Universal. Historically, children are disproportionately heavy viewers, and they seem to be watching lots of original content that Netflix doesn't own.

If we put these shows with that 72%, little of the viewership seems to be going to shows that Netflix actually controls, which leaves it very much at the mercy of the industry it was supposed to disrupt.