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Netflix Is Willing to Pay a Premium for ‘Friends’

Even as the streamer looks to emphasize original content, it reportedly shelled out $100 million to keep the sitcom through the end of 2019

The cast of ‘Friends’ sharing milkshakes with “NETFLIX” overlaid in red letters NBC/Ringer illustration

Can you put a price on nostalgia? That’s what Netflix had to decide over the course of 24 hours, when the future of the ’90s sitcom Friends was hanging in the balance. If you logged onto your Netflix account over the weekend and peered through Friends’ episode catalogue, you’d have seen a small message with a notification that the series would leave the streamer’s library on January 1, 2019. This led to a plethora of outraged tweets from subscribers, some going so far as saying that Friends reruns were the main thing—if not the only thing—Netflix was used for in their households. Well, the Friends Outrage Police has a temporary reprieve: By the end of the Monday, Netflix assured its customers over Twitter that Friends would not be leaving at the start of the new year after all.

That’s all well and good, but for Netflix, it came at a hefty price. As reported Tuesday by The New York Times, Netflix had to pay $100 million to continue licensing the sitcom from WarnerMedia until the end of 2019, representing a massive boost from the previous Friends deal, in which the company paid $30 million annually for the streaming rights to the show.

What gives? WarnerMedia, the parent company of Warner Bros.—which owns the rights to Friends—is planning to release its own streaming service slated to arrive at the end of 2019, joining Disney’s own streaming service, Disney+, also expected in the fourth quarter of next year. WarnerMedia, like Disney, will probably be pulling Warner Bros. content from other streamers within the next 12 to 18 months. That means services like Netflix, Hulu, and Amazon Prime could soon lose the rights to Warner Bros.–owned programming like The Big Bang Theory and the DC Extended Universe (i.e. Wonder Woman, Man of Steel, Justice League).

Streaming companies have anticipated this for a while, and Netflix has already felt the reverberative effects in the last few months. The streamer stands to lose its Disney library in 2019—including the latest releases from the Marvel Cinematic Universe, Pixar, and Star Wars—thanks to Disney+. As a result, Netflix’s decision to slowly pull the plug on the Netflix-Marvel television universe makes more sense as a cost-saving measure for a company spending between $12 billion and $13 billion in original programming. (It didn’t help matters that the Marvel shows were being produced by an outside studio, ABC Studios, which is more expensive than producing shows in-house, as with Stranger Things.)

This is why the big streaming companies have placed a greater emphasis in recent years on original content: By the time services like Disney+ and WarnerMedia’s start up (not to mention Apple, which will also be joining the streaming party in the near future), Netflix, Amazon Prime, and Hulu want to have amassed enough of their own programming so that the loss of licensed content won’t be a critical hit to their online libraries.

But Tuesday’s new Friends deal proves that certain shows may popular enough to serve as exceptions to the rule. Netflix rarely discloses information about what its customers are watching, but Friends is one of the most popular U.S. sitcoms. Because there are 130 million worldwide Netflix subscribers, Friends is perhaps more popular now than it ever was in its heyday.

That presents a problem for Netflix in the imminent future; the Friends deal is a temporary salve to keep the sitcom around for another year. The Times reported that negotiations between Netflix and WarnerMedia to keep Friends on the streamer were ongoing for months, and that future deals may well cost less than $100 million once WarnerMedia gets its own streaming service going. But the money isn’t the issue: $100 million is certainly a big figure, but for a company valued higher than Comcast, it’s not going to blow a hole in Netflix’s wallet. What’s worrisome is the uncertainty come 2020.

That the rise of online outrage was so swift—and that Netflix was so quick to remedy the situation with its best “Everything is fine!” tweet—speaks to Friends’ impressive staying power, both as a nostalgia play for ’90s lovers and those who discover its eccentricities (and the unfathomably large Manhattan apartments the gang could afford) for the first time. For this one series, at least, WarnerMedia has the leverage.

Netflix can produce just about everything—its own sitcoms, dramas, blockbusters, Oscar hopefuls, documentaries, reality series, late-night shows, anime, et al.—with a near-limitless budget. But the public clamoring for Friends, and the cost of its retention for another 12 months, is the kind of issue that the streamer may have to keep revisiting as other companies and their own libraries of original content make rival services. For now, nostalgia costs $100 million. In the future, it may cost even more—or others may not be willing to sell.