Netflix is a multibillion-dollar programming machine in dire need of homemade hits – and it can no longer rely on Friends for help. Last week the streaming giant announced it would be bidding farewell to the perennially popular comedy from its US service at the end of the year, as it was confirmed that WarnerMedia would now offer it exclusively on its rival service, HBO Max, when it launches in 2020.

Friends is the most watched show on Netflix, but traditional media companies are no longer willing to supply a commercial phenomenon that has upended their own business models.

By the end of next year, Netflix will also have lost the US version of The Office, the second most popular show on its service, to Comcast-owned NBCUniversal’s own global streaming service, launching in 2020. Disney, which has already pulled Marvel content from Netflix in the US ahead of the launch of streaming service Disney+ later this year, now also owns 20th Century Fox, which has moved popular shows including Family Guy, How I Met Your Mother and It’s Always Sunny in Philadelphia to US domestic rival Hulu.

Netflix will hold on to Friends in some international markets, including the UK, and that is important. Subscribers outside of the US account for 80% of new sign-ups and 60% of Netflix’s total user base of 148.8 million subscribers.

Its £12bn annual programming budget should be ample enough to fill the gaps left by Friends and The Office but some analysts warn that, outside of Stranger Things, the track record for Netflix Originals – its homegrown content – is poor. “There was always going to be an existential moment for Netflix when it simply couldn’t rely on licensed hits any more,” says Tom Harrington of Enders Analysis. “That is sort of now. But other than with Stranger Things and one or two others they’ve not really been able to create their own true hit shows.”

Despite some other notable standouts – such as Orange is The New Black and films such as Roma – the service’s homegrown stable of enduring hits is limited.

Deep-pocketed Netflix has focused on a model of churning out a huge amount of content. It is the largest commissioner of new TV shows in the world, according to Ampere Analysis, but it also cancels shows almost as fast as it makes them.

Ampere estimates that Netflix currently has 285 original TV shows in production around the world, and almost 700 of its own series on the service. But its research has also shown that Netflix is much more likely to cancel TV shows after just two or three seasons compared with traditional broadcasters. Original streaming shows have an average lifespan of just two seasons.

“Netflix seems determined to drive subscriber growth through a continuous pipeline of new content,” says Fred Black of Ampere Analysis. “But this comes at the cost of missing out on long-running franchises that keep customers coming back year after year.”

Netflix selectively releases data for some of its content that can look impressive, such as for the recent Murder Mystery, the mediocre Adam Sandler and Jennifer Aniston comedy whodunnit, which beat Sandra Bullock’s Bird Box to break the streaming giant’s record for opening weekend views with 31 million accounts viewing it in the first three days.

“They have 150 million accounts globally, they can make any show look like a hit,” says Harrington. “What you don’t see is data that shows how quickly viewing of original content drops within days after they launch it. Shows disappear fast, and a lot of Netflix is populated by largely forgettable shows. Subscribers are maybe coming in to watch an original, which is probably dropped after its second series, and then they turn to stuff they have an affinity with, like Friends and The Office, which is what has made them so important to Netflix.”

The company’s strategy will come under increasing pressure as more household-name content disappears from its service in the future.

So far, its low-cost, high volume model continues to pay off. On Wednesday, Netflix will report its second-quarter results and is expected to break through the 150 million global subscriber mark (154 million), a 24% year-on-year increase.

Investors happy with its growth – despite the weight of about £24bn in debt and liabilities, such as programming deals, across Netflix’s balance sheet – have driven its market value to £132bn. And the service remains cheap compared with traditional satellite and cable TV in western markets (if not in its new growth territories in Asia-Pacific), with its most popular monthly package costing $12.99 in the US and £8.99 in the UK.

With a large budget to make and license content, Netflix has a seemingly insatiable appetite to continue to feed enormous amounts of TV shows and films into its service. And obliging fans are happy to binge. A typical Netflix fan watches over 85 pieces of content per month, up a third in the last five years, according to research firm IHS Markit. In the last three years, the amount of TV and film content on the UK service has almost tripled from 12,000 hours to 34,000 hours, according to Ampere.

“Speaking to producers, they say that the Netflix commissioning people would tell them only partly tongue-in-cheek that the most difficult part of the job is spending all the money at their disposal,” says Harrington. “They are making more stuff than they want to.”

The Netflix juggernaut shows no sign of slowing down.

Last week, the company struck an exclusive deal to take over all the studio space at Shepperton Studios, home to productions such as Alien and Mamma Mia!, to make sure that the 40-plus productions it makes in the UK annually can be churned out without delay.

It would be very helpful for Netflix if several of those productions turned into timeless classics, because rival studios and broadcasters are not as amicable as they once were.

Best of the bunch

Stranger Things The third series of the 1980s-set sci-fi horror has smashed Netflix records, with 40.7 million account holders watching the show in its first four days after release, making it the most-watched film or series in the streaming service’s history. The show is regarded as Netflix’s flagship series, especially after the demise of House of Cards. It is proving a hit with critics and is also a commercial cash cow – there are an estimated 75 brand tie-ins for its third season.

House of Cards The one that propelled Netflix to global dominance. The series about a malevolent US presidentmay have lost its attraction following sexual assault allegations against star Kevin Spacey, who was hurriedly written out of the show, but the $100m deal to make the first two series of the high-quality political drama proved to be a smart gamble.

Roma The film that gave Netflix the Hollywood credibility the company craved. Alfonso Cuarón’s black-and-white, 70s-set foreign language drama won the Oscar for best director, finally making Netflix a force at the Academy Awards, the last bastion of the traditional film industry. Netflix has pushed some films into Oscar contention by giving them a limited theatrical release ahead of streaming – and has used the strategy to woo talent like Cuarón.

The Crown The lavish drama costs £8m-£10m an episode and has been a hit with subscribers and critics alike. Claire Foy scooped an Emmy award for her portrayal of the young Queen Elizabeth II.

Orange is the New Black Set in a women’s prison, with mostly unknown actors, the comedy-drama has won bags of awards. The seventh and final season of the series based on Piper Kerman’s memoir is released this month.

BoJack Horseman The bizarre animated comedy led by an alcoholic, washed-up actor who is an anthropomorphic horse launched in 2014 to mixed reviews. Subsequent seasons cemented the show as a bona fide hit with viewers and critics alike.

... AND TWO FAILURES
The Get Down Baz Luhrmann may have enjoyed plenty of success on the big screen, from his hyper-stylised Romeo and Juliet to Moulin Rouge, but his first foray into television was a flop. With a budget of up to £14m per episode The Get Down, a retelling of the founding of hip-hop, was cancelled after just one season.

Marco Polo Netflix’s historical saga lasted two seasons before the plug was finally pulled, reportedly resulting in a £160m loss.