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Economics

The Netflix Effect: More Streaming Means Better Shows

Internet video economics will increasingly favor original, higher-value productions.
Kathleen Grace speaks at Stream Con NYC on Oct. 30 in New York.

Kathleen Grace speaks at Stream Con NYC on Oct. 30 in New York.

Photographer: Thos Robinson/Getty Images

Kathleen Grace has done pretty well for herself in 2015. In June her production company, New Form Digital, posted a pilot on YouTube for Single by 30, a show about two teenagers who promise to marry each other if they wind up unattached at that unfathomable age. When YouTube announced its paid subscription service, YouTube Red, in late October, Single by 30 was on the list of its 10 exclusive original series and movies. A month earlier, Verizon had locked up the rights to six other New Form Digital shows for its Go90 mobile video app, including #DoOver, about a woman who has to keep reliving her disastrous 25th-birthday party, and Mr. Student Body President, whose teen protagonist is billed as a cross between Ferris Bueller and Frank Underwood. In the past year, Grace has sold 18 shows to 10 digital video services.

The market has grown a lot since Grace began running her production company in the spring of 2014. “At that moment, the market didn’t exist,” she says. Since then, a series of big-name companies such as YouTube and Verizon has been pouring money into digital-video offerings, most trying to differentiate themselves with shows or movies that can’t be found elsewhere. Because many of them are asking customers to pay, rather than have them only watch ads, those companies have to work that much harder to draw in viewers. Digital-video producers, especially those focused on programming for smartphones, are enjoying something they didn’t have a few years ago: a seller’s market.