Ampere: Studios Upping Third-Party Streaming Content Licensing

Content syndication of movies and TV shows is enjoying a renaissance — not on television, but rather in the streaming video landscape — thanks to last year’s Hollywood strikes and media companies’ desire to generate incremental revenue opportunities.

New data from Ampere Analysis shows that, after years of major studios employing a walled-garden approach to the distribution of their TV content on streaming, third-party licensing is making a comeback. London-based Ampere found that the number of TV seasons cross-licensed between Netflix and Warner Bros. Discovery’s Max and Discovery+ more than tripled in 2023. Amazon’s overlap with studios’ streaming services also grew significantly.

The analysis focuses on the characteristics of studio TV titles licensed in recent major deals including agreements between NBCUniversal, Disney, WBD and Netflix.

Separately, Sony Pictures and Universal Pictures have aggressively licensed major theatrical releases to third-party streamers, led by Netflix.

Ampere contends that Disney holds the most TV titles with licensing power, owning 148 that were still exclusive to its own streaming services as of December 2023 — a potential licensing cache more than double the size of any other major Hollywood studio.

Across all four major studios’ titles with licensing power, the comedy genre is the most common, accounting for 25% of titles. This is driven by U.S. audiences’ continued interest in a host of locally produced long-running sitcoms, including “The Office,” “The Golden Girls,” “Friends,” “Seinfeld,” and more recently “Brooklyn Nine-Nine.”

The volume of catalog episodes of these shows can keep streaming subscribers engaged longer, making them a valuable retention tool. This is particularly the case as churning and re-subscribing to subscription services is becoming an increasingly common behavior. They are also effective in generating revenue for growing ad-supported tiers.

Among the major studios, 32% of Disney’s catalog TV shows are children’s and family content, led by “Malcolm in the Middle” and “Hannah Montana.”

Not all TV shows with licensing power will necessarily be cross-licensed. Six of the 20 most popular titles in Paramount Global’s content vault are in the “Star Trek” franchise. Studios have been reluctant to give up exclusivity for major franchises as they built their streaming services. But that mindset is changing. WBD’s 2023 license deals included DC-adapted content to Amazon, Netflix and Fox-owned ad-supported platform Tubi.

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Among high-profile third party content licensing, no title enjoyed the spotlight more in 2023 than former USA Networks legal drama “Suits,” which found renewed popularity on Max and Netflix. The show, co-starring Meghan Markle before she quit acting to marry Prince Harry, set a record atop Nielsen’s weekly top 10 most-streamed content across household TVs.

Indeed, the two male leads of the show (Gabriel Macht and Patrick Adams) had their own Super Bowl LVIII ad underscoring the show’s renewed popularity.

Ampere found that 44% of viewers who did not watch Disney+ in the previous month did watch Netflix, making it the most used platform, followed by Amazon and Hulu. These three platforms also top the list among viewers who did not watch other major streamers, including Discovery+, Max, Paramount+ and Peacock.

However, ad-supported platforms Tubi and Pluto TV follow Netflix, Amazon and Hulu as the most watched streaming services among viewers who did not watch Disney+. At 16% for Tubi and 15% for Pluto TV, this puts them ahead of Max, Paramount+ and Peacock.

The prominence of AVOD services extends to other major SVOD platforms as well. Cross-licensing among platforms is more likely to skew towards unscripted content. Almost 30% of the TV seasons shared between major studio backed SVOD platforms are unscripted, which increases to 46% among ad-supports platforms.

More importantly, unscripted titles licensed to AVOD services are more likely to be non-exclusive. Of the unscripted TV seasons, 55% appear on two or more major AVOD services, compared to just 36% of scripted titles, according to Ampere.

“We expect more licensing deals for high-profile titles to be struck in 2024,” Rahul Patel, research manager at Ampere, said in a statement.

The analyst said content licensing to third parties can expand the audience for existing assets, extend shelf life and at the more successful end of the scale, inspire franchise expansion.

“This was the case with ‘Suits’ spin-off series following its success on Netflix and Max,” Patel said. “Such an approach is particularly beneficial in the current climate when commissioners are being increasingly cautious with their content spend.”

Ampere: Global Content Spend to Grow 2% in 2024, Recovering From Strike-Hit 2023

Backlogged productions from 2023 due to the Hollywood labor strikes suggests that global content spend will increase by 2% in 2024, according to new data from Ampere Analysis.

The London-based research firm found that last year’s WGA and SAG-AFTRA strikes led to a two percentage point decline relative to original expectations. In 2024, broadcasters’ and streaming services’ revival of postponed productions will steady the flow of content and push global content spending back into mild growth — reaching $247 billion in 2024, up on 2023’s $243 billion.

Despite production reaching a near-complete halt in the United States last year, global streaming services were able to weather the storm and continue a steady delivery of new original content in 2023 with the help of non-U.S. productions.

Heavier investment in original shows and movies from markets including Germany, India and South Korea helped boost global streaming services’ expenditure on original content to more than $27 billion in 2023, an increase of 13% from $23.9 billion in 2022.

With a continued focus on international productions, the delayed release of U.S. original titles, and an increased desire for sports rights, global streaming services are set to increase their total content spend by 7% in 2024 to $46 billion from $42.9 billion.

Separately, U.S. theatrical studios are set to see a 14% year-on-year decline in content investment in 2024 due to the after-effects of strike action, and ongoing focus on cost-efficiency in a cinema market that remains depressed post-COVID.

Notable exceptions of this trend are Amazon and Apple, which plan to increase theatrical releases. Apple will leverage theatrical content to increase brand awareness for its streaming service Apple TV+, while Amazon seeks to utilize MGM Studios after its $8 billion acquisition in 2022 for expanded Prime Video original releases.

“2023 was a worse than expected year for content spend due almost entirely to the Hollywood strikes,” analyst Hannah Walsh said in a statement. “The good news is we can look forward to a small recovery of 2% as production resumes and the U.S. election approaches.”

“It’s not all rosy as many studios look to cut back on theatrical releases, and broadcasters cut spending due to ongoing declines in TV advertising,” she said.

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Ampere: Scripted Series Productions Took a Nosedive in 2023

With streamers Netflix, Peacock and Max finding viewership success with licensed re-runs of TV shows such as “Suits” and “Young Sheldon,” among others, original episodic content production has taken a hit.

New data from Ampere Analysis finds that a combination of last year’s Hollywood strikes and an economically-driven downturn in the original content boom saw scripted U.S. series releases fall to 481 in 2023 — down from 510 shows during the pandemic in 2020, and 633 series in 2021 and 2022.

 

 

 

 

 

 

The production decline was underscored by the subscription streaming video platforms collectively releasing 77 fewer seasons, while legacy TV released 55 fewer seasons. While broadcast TV releases have been declining for years, last year’s decline was mostly due to the strikes, which delayed many new scripted seasons to a mid-season start in January and February this year.

On the flipside, Ampere contends that the potential for series pushed from truncated 2023/2024 seasons into the 2024/2025 seasons starting in the fall may produce a temporary bump in seasons released on broadcast in 2024.

Meanwhile, as Netflix turns, so does the SVOD and much of the entertainment ecosystem. Netflix saw original releases plummet from 107 series in 2022 to 68 in 2023 as the streamer transitioned to licensed content. The drop began in the first half of the year, so cannot be blamed entirely on the strikes, according to London-based Ampere.

Indeed, Peacock reduced original production releases by 20 titles, Hulu by 11, Max by 9, and Paramount+ by four. While Prime Video, Apple TV+, and Disney+ maintained the number of series released in 2023, only Prime Video maintained the number of series it ordered.

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Among SVOD platforms, U.S. original series production is being supplanted by international content. Far more scripted TV releases are international already, but even after 2023’s cutbacks at the top eight SVODs, there were 202 new U.S. commissions (down from 342 in 2022), versus 295 international (down from 429).

Ampere believes that while the U.S. strikes are partly the cause for the drop in episodic content production, the bigger issue revolves around the fact that internationalization has removed Hollywood as the center for TV show production.

 

 

A combination of disruptive strike action, a tightening of purse strings at SVOD services, and the relative bang-for-your-buck offered by international production…saw the U.S. scripted boom finally run out of steam,” analyst Fred Black said in a statement. “While 2024 will see some level of a bounce back in the content being ordered, many of these titles will be released in 2025, meaning any recovery is likely to be slow going.”

Ampere: Studio Streaming Video Profitability 18 Months Away

Handwringing about money-hemorrhaging streaming video platforms could soon be an issue of the past, according to new data from Ampere Analysis. The London-based research firm says studio-based streaming services should be profitable within the next 18 months.

 

After investor sentiment towards direct-to-consumer streaming video soured and studios implemented a series of cost-cutting measures, the ability for the streaming businesses of Disney (Disney+), Warner Bros. Discovery (Max), Paramount (Paramount+) and NBCUniversal (Peacock) to achieve quarterly profitability is within reach, according to Ampere.

Guy Bisson

While some studio streaming operations have already reported small profits (Max), Ampere is looking for consistent profitability, taking into account income from subscription and advertising offset by content costs, staff and marketing costs, depreciation, and amortization to predict the point that businesses reach consistentl\ pre-tax earnings.

Ampere predicts that Disney+ is likely to get there first, as early as the first quarter 2024 (two quarters ahead of company projections). Max will follow, reaching consistent profitability by Q3 2024 with both Paramount+ and Peacock achieving that goal by Q1 2025.

By 2028, studios will generate from $1 billion and $2 billion in pre-tax income a year from streaming video based on current market conditions. Additional geographic expansion would lead to even more upside.

“The analysis shows that [direct-to-consumer] is not a broken business model, but an important revamp of an existing content exploitation window,” Guy Bisson, executive director at Ampere Analysis, said in a statement.

Bisson contends that studios are now able to position streaming as a profit-making window that is complimentary to theatrical exhibition, transactional and broadcast — sectors that had previously been deprioritized.

“Profitability of the streaming model, which will be driven by advertising, will also see an acceleration of free streaming, including Free Ad-supported Streaming Television (FAST) channels,” Bisson said.

Ampere reports the shift in fiscal fortunes among studio streaming platforms has been driven by cost rationalization around content and staffing, and the embrace of advertising dollars. The latter also providing a wild card opportunity for significantly more growth and profit than currently predicted by business models based on existing operations.

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Bisson believes that a confluence of factors, ranging from the end of the pandemic, geopolitics and inflation, forced studios to reassess the return on investment of the streaming direct model. The cost cutting over last 12 months has now positioned the industry for streaming profitability in relatively short order, according to Ampere.

“[This] will enable a return to flexibility and experimentation, and a realization that existing [business] models are already in place to fully exploit studio output when streaming direct takes its rightful place as one window in the broader value chain,” Bisson said in a statement.

Ampere: Asia Pacific Market Driving Global SVOD Growth

The Asia Pacific region continues to drive global subscription streaming VOD growth as economic pressures and market saturation in mature markets such as the U.S., have pushed streaming growth to its lowest level since before the pandemic began in 2020.

In the Asia Pacific region a diverse and fast-growing economies have supported widespread advances in connectivity and gains in disposable income, driving streaming growth, according to new data from Ampere Analysis. At the end of 2023, more than 40% of the world’s streaming subscribers will be found in Asia.

Ampere tracked the major local SVOD services in APAC with content catalogs comparable in scale to the global giants Netflix and Prime Video, including UNext and Hulu in Japan, HamiVideo in Taiwan, and South Korea’s WatchaPlay.

UNext and Hulu Japan added around 17% more titles compared to a year ago. Taiwanese platforms MyVideo and KKTV offered more than 9,000 titles and 4,800 titles, respectively, through September. And while Indian SVOD platforms’ catalogs have grown less, local platforms still dominate the market with Disney+ Hotstar and Eros Now – although the recent loss of IPL cricket distribution rights harmed Disney+ Hotstar’s subscriber base.

Ampere found that younger video viewers in Asia tend to over-index for less mainstream genres. For instance, among 18–24-year-olds, 25% are more likely to enjoy anime and 19% more likely to enjoy horror than average. But even within demographic groups there isn’t a universal trend – anime is widely enjoyed in the Philippines and is highly favored in Japan, but does not score as well in Australia and India.

Attitudes towards local and imported content also vary. Consumers in China, India, Japan, and South Korea prefer locally-produced TV shows and movies, while those in the Philippines, Indonesia, Malaysia, and Thailand more frequently watch foreign-language (i.e., U.S.) content

The correct subtitling and dubbing strategy is imperative for any streaming platform in the region to best cater to the demand for imported content. Indonesians have the strongest preference for subtitles, while Thai consumers prefer dubbed shows and movies.

Senior analyst Tingting Li contends that for SVOD services to attract subs in crowded markets, platforms must match content to the preferences and viewing patterns of each country. Platforms should complement mainstream content with up-and-coming niche genres to attract younger viewers.

“The right mix of subtitled and dubbed content will ensure audiences stay engaged and spur future growth,” Li said in a statement. “As locally-produced content grows in popularity outside the region, both local and international streamers are primed to invest further in creating and acquiring content in the region.”

Ampere: Global Pay-TV Market Penetration to Decline for First Time in 2024

Ongoing pay-TV subscriber loses in the United States are now affecting global trends. New data from Ampere Analysis finds that global pay-TV penetration (the number of pay TV subscriptions relative to the number of households) will see its first yearly decline ever in 2024.

This will follow pay-TV market penetration coming to 60.3% in the current fourth quarter. By 2028, global pay-TV penetration will have fallen by almost four percentage points.

In North America, pay-TV penetration has dropped almost 50% from a high of 84% in 2009 to 45% in 2023, caused by a combination of high subscription costs and competition from SVOD. Despite this decline, the annual revenue generated per user remains at more than $1,100, the highest across any region.

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Latin America has also shown large declines in pay-TV penetration since 2016. This is largely led by Brazil, which recorded a 10% drop since its peak pay-TV penetration of 42% in 2016. Although North America and Latin America are driving the declines, all regions globally will be in decline by 2025.

Meanwhile, the Asia Pacific region and Europe have seen the highest penetration of pay-TV growth in recent years, with large gains coming from China Mobile after it acquired an online TV license in 2018. This growth has mostly been driven by low-cost IPTV services, which are often bundled into broadband packages for a low or nominal cost. While these regions will also fall into decline after 2025, there are still some growth markets, such as Portugal, Serbia and Hungary, which are expected to see further growth in the forecast period.

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Senior analyst Rory Gooderick says the increased trend of bundling streaming with pay-TV offers a framework for traditional cable TV companies to transition their business into a streaming aggregation play, and stabilize subscriber churn.

“Despite the projected decline in the reach of pay-TV, cable and satellite platforms will remain a powerful force in the TV world, and important distribution partners for streaming products, as evidenced by the recent distribution deal between Disney and Charter in the U.S., which saw select Disney+ streaming services bundled into Charter’s TV packages,” Gooderick said in a statement.

Ampere: Competition-Based Reality TV Shows Defy Industry Viewership Turbulence

Outside of the “Real Wives” franchise, most of competition-based reality TV’s legacy format shows originated outside the U.S., in Western Europe and Asia.

Programs include “The Masked Singer,” “MasterChef,” “The Voice,” “Love Island,” “Bake Off,” “Big Brother,” and “Dancing with the Stars,” among others.

This genre of reality TV is proving to be immune to the decline in commissioning content across wider media industry, according to a new data from Ampere Analysis. While the volume of unscripted titles announced in North America fell by 14% between Jan. – June 2022 and Jan. – June 2023, titles based on competition decreased just 6%.

With competition representing a “safe bet” in a turbulent market, competition-based commissions are decreasingly euro-centric, as global streamers and other non-European commissioners represent an increasing proportion of new shows announced.

Western Europe, and in particular the U.K., still remains the creative engine of competition-based reality TV, including Max’s new dating import, “Naked Attraction,” which showcases completely naked contestants trying to find love.

Between the first half of 2019 and first half 2023, 36% of all competition-based commissions were based on UK shows. However, the emergence of global competitors sees English-language titles represent a decreasing proportion of format-based commissions. While English-language format titles represented 59% of all format-based commissions in H1 2019, this number had dropped to 36% by the same period in 2023.

With 824 titles announced based on its formats between H1 2019 and H1 2023, Asia’s Banijay leads the field with almost twice as many titles than any other owner (ITV Studios was second with 464 titles). Owning a fifth of the top 20 formats globally, the vast catalog includes many titles previously sold by Endemol Shine, acquired by the company in 2020. These include “MasterChef,” “Big Brother,” “The Voice,” “Robinson” (previously Expedition Robinson) and “Lego Masters”.

Although Banijay leads in terms of the total number of titles, most of these do not represent new international versions. Between H1 2019 and H1 2023, 59% of all commissions based on Banijay-owned titles were renewals in existing markets. South Korea’s MBC-owned “The Masked Singer” commissioned in more markets than any other show.

While streamers have a long way to go to compete with more established players in the competition-based reality landscape. VOD commissions made up just 15% of all format-based commissions announced between H1 2019 and H1 2023.

International production capabilities also give global streamers a competitive advantage over their linear TV competitors. While linear commissioners carry out negotiations to import a format from elsewhere, streamers can easily recreate their own formats in multiple markets. Global streamers, Discovery+, Netflix, Amazon, and Discovery+ made up three of the top 15 commissioners of format-based titles between H1 2019 and H1 2023, and VOD commissions represent an increasing proportion of format-based commissions overall.

“With [content] commissioners facing more stringent spending limits, format-based titles offer an opportunity for companies to reduce risk by recreating shows that have a proven track record,” Olivia Deane, senior analyst at Ampere, said in a statement. “Formats also give global commissioners an advantage, as they can easily replicate successful formats in different operating markets. The future will represent unprecedented competition for Western European format owners, as more international and global players increase their focus on format-based titles.”

Ampere: Western European Streaming Video Market to Pass North America in 2024

The number of households taking at least one over-the-top video subscription in Western Europe is set to surpass the number in North America next year, with the United Kingdom and Germany driving much of this growth, according to analysis from Ampere Analysis. North America (U.S. plus Canada) will drop to become the No. 3 streaming market after Asia and Western Europe.

With countries outside of North America forecast to drive streaming growth, the United States and Canada will also no longer account for the majority of streaming revenue, falling below 50% of global revenue in 2024.

Global streamers beyond Netflix and Prime Video (i.e., Disney+, Paramount+ and Max) have been increasingly targeting international markets for production to satisfy the demands of audiences outside the United States and bolster further growth in regions with the most potential for new subscriber growth. Only 43% of Netflix’s upcoming series are being made in the United States, and other streamers are following suit. Prime Video and Disney+ also now make fewer than 50% of their upcoming shows in the United States and Paramount+ is rapidly heading the same way.

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With Asia holding the crown as the fastest-growing and largest region for streaming, it is likely to see the biggest increase in focus for content investment with a knock-on effect for viewers who will see more and more Asian-origin content on their streaming platforms. Western Europe, too, will become increasingly influential as a source of content on streaming as, moving forward, it is set to remain the second strongest region for streaming customers.

“Streaming saturation in North America is the primary driver for reduced growth,” Guy Bisson, executive director at Ampere, said in a statement.

The analyst said third-party markets have more headroom for new subscribers, both in terms of consumers entirely new to streaming and in the number of services subscribed to in each home.

“North America also losing its place as the largest revenue generating region can only accelerate the existing trend for focusing content investment on key growth markets having long-term implications for the U.S. production sectors and for inward investment into Asia and Europe,” Bisson said.

Ampere: Ad-Supported SVOD Plans Have Topped 100 Million Subs in the U.S.

Since launching late last year, ad-supported subscription streaming video tiers have skyrocketed in popularity in the United States, according to new data from  Ampere Analysis.

Hulu, Peacock and Paramount+ represent the bulk of subscriptions. However, uptake is growing for players like Netflix, driven in no small part by its account-sharing crackdown, and for Disney+, which increased its price around the same time it launched its cheaper ad tier.

Ad-supported SVOD services are an increasingly important element of streaming service monetization, often generating more average revenue per subscriber (ARPU) than ad-free subscribers. A major factor that prompted Netflix to remove the ad-free basic tier in many markets. The tiers also represent a way for consumers to maintain a wider array of subscriptions in tougher economic times.

 

According to Ampere, more than 1 million U.S. Netflix subscribers use an ad-supported tier, representing nearly 2% of the entire subscriber base, while around 800,000 Disney+ accounts are on the ad-supported tier, representing around 2% of its subscriber base.

Prior to the launch of Max, Discovery+ had about 10 million ad-supported accounts, with the former HBO Max adding 2 million ad-supported subs.

Ampere expects that more than 90% of Hulu subscribers are on the ad-supported tier, representing around 45 million subs. Hulu launched as an ad-supported subscription service in 2010, before launching its ad-free tier in 2015.

Peacock has the most ad-supported subscribers of any new U.S. subscription streaming service, with more than 30 million ad-supported subs. Paramount+ trails with more than 25 million ad-supported U.S. subscribers.

Ampere expects that ad-supported subscription tiers in the U.S. will generate more than $10 billion in advertising revenue in 2027.

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Ampere: Nearly Half of Global Internet Users Have Switched Off Broadcast TV

The percentage of internet users claiming to watch little to no linear broadcast TV in a typical day grew 22% to almost half (45%), according to new data from Ampere Analysis. In a global survey of 54,000 adults across 28 markets, Ampere found that while most younger respondents unsurprisingly watched little broadcast TV, another 35% of those claiming to watch no broadcast TV were over 45 years old — a rise from 28% six years ago.

Specifically, in the first quarter this year, 37% of internet users claimed to watch little to no linear TV on a typical day. The percentage of high linear TV viewers — those who watch at least four hours of broadcast TV daily — has also declined in the same two-year time frame, down from 19% of respondents in 2021 to 15% this year.

By comparison, the percentage of internet users saying they watch more than four hours of video-on-demand (VOD) content in a typical day is up 4% to 62%.

While streaming video consumption continues to increase, Ampere found that so-called “low-level” TV broadcast consumption (less than two hours per day) suggests that many internet users still tune in for key live events such as sports, major reality TV shows and exclusive dramas.

Additionally, pay-TV operators’ investment in proprietary streaming services has ensured they can still engage with streamers. In fact, engagement with these broadcast-led video services has increased by 26% since Q1 2023.

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Minal Modha, research director at Ampere, contends that while the decline in linear TV viewing looks like a troubling trend for broadcasters, adoption of video streaming options should limit subscriber losses.

“If the linear channels can continue to adapt and provide a strong OTT offering for audiences switching from scheduled TV channels, they have an opportunity to retain them, albeit on a different medium,” Modha said in a statement.