Ampere: SVOD Seeks International Growth to Offset Domestic Saturation

With subscription streaming services such as Netflix, Amazon Prime Video, HBO Max, Hulu and Disney+ having reached market saturation in the United States, the need to expand internationally is driving services to focus on niche foreign territories.

While SVOD pioneer Netflix is available globally, except in China, and Prime Video, and Disney+ have a strong presence in select European markets, with Disney also enjoying market leadership in India thanks to the acquisition of streaming service Hotstar in the 20th Century Fox merger.

Ampere Analysis finds that a key theme in 2022 will be the continued rollout of the international OTT services beyond the launch markets of the U.S. and Western Europe. Specifically, Disney+ is looking to launch in the greater Europe, Middle East and African regions in the summer, while HBO Max eyes Eastern Europe. Paramount+ and NBC Universal’s Peacock are working together to also establish a foothold in Eastern Europe.

“As of the end of 2021, Netflix will be present in over [33%] of Western European homes, and Amazon Prime Video in over [20%],” analyst Tony Maroulis said on a webcast. “Having two strong established players in the market puts new entrants in a very difficult position as they’re competing for the lower-down places.”

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Ampere contends that streaming services are able to grow regional subscriber bases through the investment of localized content. Although there is high engagement with Hollywood movies, there’s actually higher engagement for local TV shows and films, according to analyst Minal Modha.

“Netflix and Prime Video are beginning to tap into this in order to grow their subscriber bases in these countries,” Modha said.

Lottie Towler, research manager at London-based Ampere, contends that with the availability of international content growing, user demand for the content is increasing as well.

“Netflix Top 10s show that the worldwide success of a [French series] like “Lupin,” which did very well in Western Europe, also resonated with audiences further afield, in markets in Latin American and Asia Pacific,” Towler said.

Modha says that a deeper dive into Netflix and Prime Video subscribers finds that their local content interest is reflected at the macro level.

“What this means is that by tapping into local content production hubs, Netflix and Amazon will not only be able to attract new subscribers, they’ll also be able to satisfy the desires of their current subscriber base,” she said.

As streaming platforms diversify their content offerings targeting different markets, consumers are likely to see more partnerships with local production companies, according to Towler.

“We’re also likely to see more acquisitions, particularly as the pool of available studio titles to license gets smaller and smaller,” she said.

Ampere: Global Content Spend Topped $220 Billion in 2021, Driven by Streaming Video

What a difference a pandemic makes.

Global spending on visual content is projected to top $220 billion in 2021 — up $20 billion from 2020 when industry shutdowns due to the spread of the COVID-19 virus halted productions on movie and TV sets, according to new data from Ampere Analysis.

Leading the spending: streaming video, specifically Netflix, which reportedly spent $13.2 billion this year to lead all platforms. Rivals Apple TV+, Disney+, HBO Max, Peacock and Paramount+ spent a combined $8 billion on original content.

Overall, Comcast and Disney spent $22.7 billion and $18.6 billion, respectively, on original content this year when including all of their linear TV and theatrical operations.

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“Comcast and Disney invest heavily in sports rights, which — alongside their hefty investments in original content — contributed to their leading positions on the table,” Hannah Walsh, research manager at Ampere, said in a statement. “Sports rights made up of over a third of both Comcast and Disney’s spend in 2021.”

Indeed, Netflix co-CEO/chief content officer Ted Sarandos remains resolute that the streamer would not venture into live sports streaming, including entering bidding rights for sports leagues.

That said, Ampere said SVOD platforms upped their content spend in 2021 by 20% to about $50 billion, which is up more than 50% since 2019.

“In 2022, we expect content investment to exceed $230 billion, primarily driven by subscription streaming services, as the battle in the original content arena intensifies — both in the U.S., but also in the global markets which are increasingly key for growth,” Walsh said.

Ampere: Appetite for International SVOD Content Growing Fastest in English-Speaking Markets

U.S. content historically has tended to dominate on SVOD platforms on the global stage, while in individual countries, local content has been strong, but that is beginning to change, according to new research from Ampere Analysis.

In 2017, 15% of the world’s 100 most popular titles were made outside the United States. This year, that figure has grown to 27%.

Ampere’s analysis reveals that English-speaking and European markets currently have the lowest appetite for internationally produced content, largely thanks to their heritage of strong local film and TV production. These countries generate a significant proportion of global pay-TV and OTT revenues, and by 2022 will be responsible for generating 71% of OTT subscription revenue and 67% of global pay-TV revenue.

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Global SVOD platforms have previously chosen to focus on local content in these markets due to their scale and strong preference for locally produced titles, but preferences in these countries are starting to shift, according to Ampere, with the United States and the United Kingdom showing the biggest changes.

“It has been gradual, but our analysis shows that the audience for internationally-produced content is growing in the key revenue-generating English-speaking and European markets,” Rahul Patel, senior analyst at Ampere Analysis, said in a statement. “SVOD subscribers in the U.S., U.K., Australia and Canada in particular are tuning in to content produced overseas, and the major global SVOD platforms like Netflix are driving this trend by commissioning high quality non-English language titles, and by increasing the number of foreign language titles in their catalogues.

“The pandemic offered a boost to internationally produced content as production shutdowns and release delays led to locked-down viewers looking further afield for shows and movies to watch.

“As the SVOD players expand geographically and continue to make high production value titles in a multitude of global markets we expect the demand for overseas produced content to further increase.”

Ampere: Disney+, ESPN+, Hulu Top 100 Million Combined U.S. SVOD Subscribers

Disney topped 100 million U.S. subscribers to its streaming services for the first time in early Q4 2021, according to new data from Ampere Analysis. By the end of this quarter (ending Dec. 31), the “Disney bundle,” i.e., Disney+, Hulu and ESPN+, will further boost customer numbers.

Disney ended the third quarter with 179 million SVOD subs globally.

Disney topped 50 million U.S. subs in Q4 2019 following the launch of Disney+, and two years later hit 100 million, with both Hulu and Disney+ on track to finish the year in excess of 40 million subs.

ESPN+ is expected to finish 2021 with more than 20 million subs, nearly six times more than at the end of Q3 2019, before the launch of Disney+. Ampere estimates that the domestic client base of the three services will reach around 108 million subs by the end of the year, up from around 99 million at the end of Q3 2021.

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“A strong content portfolio from Disney+ and Hulu, making the most of its key Marvel and Star Wars franchises (on Disney+) and FX (on Hulu), as well as the continuation of live sports (on ESPN+) has further driven subscription growth this year,” Toby Holleran, research manager at Ampere, said in a statement.

Holleran said the strategy to incorporate Disney+ and ESPN+ subs — alongside Hulu — with Hulu online TV will further push the domestic sub base to around 108 million by the end of the year.

With media reports suggesting NBCUniversal is considering moving its content from Hulu to the Peacock streaming service in 2022, Holleran said Disney could still grow subs.

“The combination of attractive bundled pricing, alongside a strong slate of original content scheduled for release in 2022 across Disney+ and Hulu, [we] expect the combined suite to experience growth beyond 2021,” he said.

Netflix Adding Older Streamers, Per Ampere Data

Netflix is beginning to replace its younger customer base with older streamers, as people of all ages are seeking on-demand entertainment, according to new data from Ampere Analysis.

In some mature markets, for the first time 24- to 44-year-olds are now more likely to be Netflix subscribers than their 18- to 24-year-old peers, according to a consumer survey of 48,000 Internet users across 25 markets. The data illustrates the rapid demographic changes in media consumption as the world emerges from lockdown.

Indeed, global monthly usage of Netflix increased by over 22% among the 45+ group in the past two years, while the same time period saw a growth of just 5% among younger consumers.

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Ampere contends the demo change could be the result of younger consumers seeking out-of-home entertainment for the first time since the pandemic began. Recent box office hits Cruella and Marvel’s Shang Chi and the Legend of the Ten Rings saw upticks in younger moviegoers. Nearly half of returned cinemagoers this quarter were aged under 35. Pre-pandemic, they represented just over a third of theatrical attendees.

“We can see the pandemic’s impact as older audiences turned to Netflix for entertainment during the numerous lockdowns,” analyst Minal Modha said in a statement. “As we emerge from the pandemic, it’s the younger demographics who are spearheading the return to the cinema in search of a more social viewing experience.”

Ampere: Streaming Device, AVOD Use on the Rise

With the ongoing push by ViacomCBS, Fox Entertainment and Roku to further their respective ad-supported VOD platforms Pluto TV, Tubi, and The Roku Channel, new data from Ampere Analysis finds that AVOD has joined SVOD as go-to destinations on streaming devices. Ownership of streaming devices has increased by 18% since the third quarter in 2019, before the pandemic began.

The London-based research firm said devices such as Roku, Amazon Fire TV or Google Chromecast are now in nearly two thirds of U.S. Internet homes and half of U.K. Internet homes.

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These streaming media devices facilitate access to an array of free-to-view and paid video services and are helping to drive adoption of a wider range of streaming products. In the crowded domestic subscription market, AVOD platforms are growing in viewer engagement as users search for low-cost entertainment options to SVOD.

About 34% of domestic internet users have used an AVOD service such as Pluto TV, Tubi and The Roku Channel in the past month, compared with 17% in Q3 2020. Usage is growing particularly quickly among younger consumers. In Q3 2020, only 9% of 18- to 24-year-olds had watched AVOD services, compared with 30% in Q3 2021.

“The growth in AVOD usage partly reflects how expensive the streaming market is becoming,” analyst Minal Modha said in a statement.The fact that younger audiences are now engaging with AVOD will be welcome news for platform owners and will make the services even more attractive to [advertising] brands.”

 

Netflix Becomes Largest Producer of Original Content in Europe

French lawmakers just ruled that foreign streaming video services such as Netflix, Amazon Prime Video and Disney+ must allocate at least 25% of local revenue toward locally-produced original content.

Netflix, which has long advocated spending 30% of local revenue on original productions, is well-ahead of the content spending curve, according to new data from Ampere Analysis.

The London-based firm found that Netflix has become the largest single commissioner of new European scripted content. This represents one of the strongest indicators of the global changes in production market dynamics and represents a boon for European producers as the region becomes increasingly important for global streamers.

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While European Public Service Broadcasters have long been the largest commissioners of new scripted content, Netflix passed them by during 2020, including heavyweights the BBC and Germany’s ZDF in terms of number of commissions across Western and Central Europe. Its local approach to global scale means it will increasingly ascend to become the most important single commissioner at a regional level, according to Ampere.

“As a marker of the wider changes in the entertainment industry, the ascent of Netflix to become the largest single commissioner of new European Scripted content is pivotal,” Guy Bisson, executive director of Ampere Analysis, said in a statement.

To date, Europe’s major public broadcasters have driven the European content creation industry and local drama production. However, the ever-increasing importance of international markets to Netflix’s subscriber growth, its wide investment in locally relevant drama across the region, and the shift to pan-regional or global content as the basis for value means that today, global streamers like Netflix are driving local markets.

“With the newer studio direct streaming platforms already beginning to emulate Netflix’s strategy of commissioning new scripted content outside the U.S., there could not be a better time to be a European content creator,” Bisson said.

Report: Streamers Targeting Older Viewers

Subscription streaming VOD isn’t just for the younger demo. New data from Ampere Analysis found streaming services are actively targeting viewers aged 35 and over in their content commissioning strategies. These audiences have traditionally been linear TV’s core viewers, but now SVOD pioneers such as Netflix, Amazon Prime Video and Hulu have turned their attention — and programming budgets — to older viewers, according to Ampere.

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London-based Ampere noted older viewers covet documentaries, dramas and crime thrillers, which are now among streamers’ top five commissioned genres. Netflix is the largest original content commissioner worldwide, with more than 100 titles ordered between January and March. This amounts to more than 30% of the number of titles ordered by Netflix in 2020. In March, Netflix ordered more doc titles than any other genre, with over half true crime.

“The fastest growth in uptake of VOD viewing is now in the 35–44-year-old age bracket,” Minal Modha, consumer research lead at Ampere Analysis, said in a statement. “Nearly twice as many in this age group are now high VOD viewers compared to two years ago.”

At the same time, Ampere noted consumers who don’t engage with VOD are 55% more likely to be older than 45. The report classified TV viewers based on the time they spend watching TV or online video on a typical day. “Medium” viewers watch for two to four hours a day, and “high” viewers more than four hours a day. About 50% of “medium” linear TV viewers are over 45 years old, with this group often watching locally produced TV series. “High” linear viewers are in the same age range with 57% aged over 45. They are driven by a love of sports and TV shows, with one third (35%) focusing on live sports.

To persuade these viewers to become subscribers, Ampere noted streaming platforms need a three-pronged approach, combining adjustments to genre focus, sport programming and availability of local language content.

  1. They must continue to invest in factual and crime and thriller content. Ampere’s data suggests that this shift is already underway among many of the more established VOD services.
  2. They should expand the array of sports-related content. Sports rights are going to be an important part of any conversion strategy. In the United States, live sports is already beginning to move to some of the newer studio-backed streaming services, but rights in international markets are often difficult to justify for global players. One approach these global streamers might take is to create ancillary sports content. Factual and reality documentary series around players, teams and events are cheaper than live rights, have a better shelf life and offer a draw to die-hard sports fans.
  3. To compete with the local players more effectively, especially in those markets with historically high engagement with linear, and strong local content industries — such as France, Germany and Japan — Ampere recommended more local language programming.

 

“The laser-like focus on matching commissioning strategies with the favorite genres of the older demographics in question is evident, but to more fully compete with linear TV players, local language content is going to be key, as will some sports content, be it live or ancillary,” Modha said in a statement.

Is Netflix’s Pandemic Boom Over? Analysts, and Even the Streamer Itself, Think So

NEWS ANALYSIS — Heading into Netflix’s first-quarter fiscal results on April 20, market speculation regarding the streamer’s subscriber growth dominates.

Following a year, 2020, in which Netflix added a record 37 million subs, conventional wisdom suggests the SVOD pioneer can’t replicate, much less exceed, last year’s Q1 sub increase of 16 million subs.

London-based Ampere Analysis and Los Angeles-based analyst Michael Pachter contend Netflix added 6 million subs worldwide through March 31 — the lowest sub gain in four years. Of course, that’s playing it safe, considering Netflix itself has projected the same conservative sub growth.

That’s a smart move, since Netflix short-sellers typically salivate ahead of earnings, hoping for bad news — only to be dashed at the gallows when positive results come out.

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“It is not quite the end of the pandemic effect for streaming services, but we are beginning to see the tail end of it; it’s definitely on the wane,” Richard Broughton, analyst at Ampere, told The Guardian. “If Netflix’s numbers do come in as predicted, they will be the lowest for a good few years.”

Netflix ended 2020 with slightly more than 203 million subscribers and expects to end the first quarter of 2021 with 209.6 million subs. The service added 41% of subs from Europe and the Middle East.

“We’re becoming an increasingly global service, with 83% of our paid net adds in 2020 coming from outside the [North America] region,” co-CEOs Reed Hastings and Ted Sarandos wrote in the company’s Q4 shareholder letter. “The quarterly guidance we provide is our actual internal forecast at the time we report and we strive for accuracy.”

Pachter says Netflix has executed “extremely well” during the pandemic by keeping its “foot on the gas pedal” for subscriber growth, while benefiting from a disruption in content production that allowed it to generate — for the first time — positive free cash flow.

“While we are far more constructive about Netflix than we have been at any point in nearly a decade, we continue to question its [market] valuation,” the analyst wrote in a note.

Netflix continues to successfully fend off growing competition from Disney+; increased content spending from Amazon Prime Video; and pending European launches of HBO Max and Paramount+. As warmer weather arrives around the world and pandemic restrictions on social gatherings ease due to vaccinations, the number of consumers interested in binge-viewing the latest U.K. serial drama might wane.

“Netflix went into the pandemic as the strongest service, and although there has been the arrival of very successful new entrants such as Disney+, it is [still] in an extremely strong position now,” Broughton said.

Domestic SVOD Subs Top U.S. Population

There are more subscriptions to streaming video services in the U.S. than people living in the country.

That’s the latest data from Ampere Analysis that shows there are now more subscriptions to services such as Netflix, Amazon Prime Video, Hulu, HBO Max and Disney+ than the entire U.S. population.

The pandemic and stay-at-home measures, the launch of new studio-backed subscription services, and increased rates of service stacking all contributed to reaching this milestone through March 31.

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There are now nearly 340 million subscriptions, with 57% of Internet users saying that SVOD services are the main way they watch TV and movies. More than 25% of high-speed internet users in now report using five or more streaming services. More than two thirds of online consumers regularly binge watch TV.

Ampere said that globally, the U.S. has the highest level of reported binge watching of any developed market.

“In 2020, pay-TV penetration dropped below 60% for the first time, down from more than 80% at the beginning of 2015, with consumers increasingly shifting to SVOD services,” Toby Holleran, research manager at Ampere, said in a statement. “Alongside growth from the pandemic, 2020 also saw the domestic launches of both Peacock and HBO Max, which grew the market even further.”

Holleran said that as more consumers shifted away from linear TV and streaming service options increased, consumers curated their own content portfolios, leading the overall number of subscriptions to exceed the population.

“In our latest U.S. consumer wave, the average SVOD household took more than four services, and with the more recent launch of services such as Paramount+ and Discovery+, this could grow even further as 2021 progresses,” he said.