Ampere: Netflix’s Original Foreign Content Production Numbers Top All Rivals

At a time where Netflix is feeling the pinch of successive quarterly subscriber losses, the SVOD pioneer’s commitment to international original content productions continues to dominate the market, according to new data from Ampere Analysis.

The London-based research company found Netflix commissioned original productions from 28 markets in the second quarter (ended June 30) to expand its market for original series and movie productions to 44 since 2020. That compared with 27 markets for Warner Bros. Discovery, 23 markets for Disney+ and 21 markets for Amazon Prime Video.

As Netflix and its major U.S. competitors expand internationally, the streamer’s foreign content productions have topped all domestic content productions for the past seven quarters. While Netflix has upped its domestic content production through six months of the fiscal year, the tally (27%) is still down from 46% in 2019.

“It’s in the context of intense competition at home that Netflix’s refocus on international originals makes the most sense,” analyst Fred Black said in a statement.

Black contends that since the start of 2020, Netflix has commissioned 664 American-made TV or movie originals. That’s 50% more than the combined effort of Discovery+/HBO Max, twice as many as Disney+/Hulu, and three times more than Prime Video.

However, internationally Netflix commissioned 814 titles over the same period – 2.3 times more than Amazon, 2.4 times more than Warner Bros Discovery, and three times larger than Disney’s suite of international streaming services.

“Netflix has commissioned more non-U.S. originals over the period than its key rivals combined,” Black said. “Opening up new markets for originals and doubling down on the content from its most successful will be key to Netflix finding subscriber growth again.”

Ampere: Apple TV+, Paramount+, Netflix Favored by U.S. SVOD Subs Switching Service

Apple TV+, Paramount+ and Netflix are the most popular SVOD platforms for U.S. consumers switching their streaming services, according to new data from Ampere Analysis.

London-based Ampere found that among subscribers who switched service within 60 days, 11% chose Apple TV+ and Paramount+, followed by Netflix.

Following Netflix’s unexpected drop in net subscribers in Q1, Ampere focused on which competing platforms Netflix subs are targeting. The study, which looked at the 27-month period between Q1 2020 and Q1 2022, revealed that Apple TV+ is the first choice for Netflix deserters, followed by Amazon Prime Video and Hulu. Subs leaving Netflix have been less adventurous in trying new services than subs departing other streaming services. Departing Netflix subs currently have the lowest number of alternative streaming services among any of the major platforms.

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Sister Synergy 

Streaming video providers offering a bundling of alternative platforms suffer the least subscriber churn, according to Ampere. The advantages are especially clear for Disney+, which offers subs a bundle with Hulu and ESPN+. The most popular next service for departing Disney+ subs is Hulu. Similarly, Hulu subs’ first choice is a Disney+ subscription.

A similar effect is also seen among Paramount+ churners. While Apple TV+ is the first choice and Netflix the second, service defectors choose Showtime (owned by Paramount) as their third choice.

Boomerang Behavior 

Overall, around 30% of streaming subscribers switch services in any given two-month period. Of users who leave a service, just over half (56%) choose not to re-subscribe or switch to a new service within two months. However, 14% of customers leaving a platform return within two months, and this boomerang behaviour reduces effective churn rate.

Departing Netflix subs are most likely to boomerang: 23% resubscribe within two months. The comparable rates for other services are 11% for Disney+ and Hulu, 10% for Apple TV+, and 15% for both HBO Max and Paramount+.

High Spend, High-Stack Households

The analysis shows that higher-spending high-stack households are engaging in ‘dipping’ — moving in and out of services higher up the stack. Smaller services are currently being taken in homes that are already avid SVOD watchers and chasing more variety. By contrast, those with only one or two streaming services are content (for now) with the major providers and tend to move between the big two or three streaming choices.

Ampere: Paramount+ No. 2 in Original U.K. Content Production in 2022

U.S. streamer Paramount+ entered the U.K. streaming market — currently dominated by giants Netflix and Amazon Prime Video — on June 22 with a focus on local content, including the crime and thriller genre. According to a new report by Ampere Analysis, Paramount+ holds the second-largest slate of titles commissioned in the U.K. in 2022, with 13 commissions so far this year, second only to the market leader Netflix with 16 commissions.

In Q1 2022, Paramount+ expanded into Western Europe with most of its new commissions (seven of 12) set to be produced in the British market. The second slate of original titles in Q2 consisted of eight more (six from the U.K.), making the region the highest for Paramount+ original commissions outside the U.S.

Seven of the 13 commissions announced by the streamer in the U.K. so far this year have been crime and dramas, underscoring the genres’ popularity among the British. The slate includes three scripted series, including an adaptation of Jess Ryder’s 2018 psychological thriller “The Ex-Wife.” There are four unscripted series, including “The Box,” showcasing serial killers and presented by British detective Chris Loudon.

Paramount+ joined the U.K. market as SVOD stacking is becoming increasingly popular in the U.K. Many British households now subscribe to two or more streaming services, with the average streaming household having access to 2.7. This is still below the U.S. average of four streaming services.

“Paramount+ is conscious of how crowded the U.K. streaming market is becoming, and their decision to distribute with Sky+ will help tackle this challenge by providing instant subscriber reach,” Ampere Analyst Zuzana Henkova said in a statement. “One important differentiator for Paramount+ is its U.K.-made content and this will also be key to engaging Sky’s customer base, who are heavier-than-average viewers of U.K. content.”

Ampere Analysis: Netflix Acquisition of Roku Would Be Expensive, But Could Add Synergies

A much-speculated possible acquisition of Roku by Netflix continues to polarize some Wall Street analysts, with LightShed Partners’ Rich Greenfield calling the idea “absurd,” while others ponder the cost-saving synergies.

In a note, Toby Holleran, research manager, Ampere Analysis, outlined how the deal could positively impact Netflix, despite the likely exorbitant purchase price and its impact on the streamer’s existing debt load.

“While a large-scale acquisition would add significantly to this [debt], with Netflix already planning to launch an ad-supported tier, a purchase of Roku would bring benefits in multiple areas of the business,” Holleran wrote.

Specifically, the analyst says Roku has a content catalog of about 14,500 movies and TV shows, compared to about 7,300 largely original titles at Netflix.

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Ampere says Netflix could see hundreds millions of dollars annually in the licensing and sales of Roku operating software and hardware. Roku has a big lead on Netflix in advertising through The Roku Channel, which is entirely ad-supported.

In the most-recent fiscal quarter, Roku saw net revenue increase 28% year-over-year to $734 million, platform revenue increased 39% to $647 million, and gross profit increased 12% to $365 million.

Roku also added 1.1 million incremental active accounts to reach 61.3 million. Streaming Hours increased by 1.4 billion hours over the last quarter to 20.9 billion, and more importantly, average revenue per user grew to $42.91, up 34% from last year.

“Were Netflix to go ahead with such a deal it may choose to keep the Roku branding for a while, positioning its ‘free with ads’’ service as either ‘Netflix Roku’ or ‘Netflix Roku (free)’ given that both brands are well-established,” Holleran said.

Ampere contends Roku would give Netflix options as it embraces advertising. The London-based research firm believes Roku would help Netflix determine which subscribers and/or markets could sustain higher ad CPMs, while offering ads to its premium subscribers at the same price as standard subs pay.

“Ultimately, if Netflix wants to offer a viable ad-supported tier without building a new platform from scratch, it will either need to partner with (or acquire) a company with expertise, scale and traction in the space. Roku certainly fits the bill from that perspective,” Holleran said.

Regardless, Ampere says acquiring Roku is difficult decision for Netflix when considering just the increased debt required for the purchase price. The firm wonders if partnering, rather than acquiring, a third-party would be more advantageous in the short-term.

“This is not a no-brainer for Netflix as there is lots of competition within the device space,” Holleran said. “As such, whatever the potential benefits of any such deal, its feasibility, alongside whether a Roku acquisition makes sense overall, remains unclear for now.”

Netflix Reaches 30% Threshold for European Content Offerings

Netflix has long been a pioneer among streaming services offering original European movies and TV shows to subscribers. The SVOD pioneer’s content slate now averages about 30% European content, according to new data from Ampere Analysis.

The European Union mandated foreign streaming services — starting in 2021 — carry at least 30% localized content, or risk undisclosed penalties. The new rules stipulated that if SVOD giants Amazon Prime Video, Disney+, HBO Max, Peacock and Paramount+ wanted to expand into Europe, they had to up their local content spending.

The mandate was put on hold following the outbreak of the COVID-19 pandemic.

Regardless, Netflix has now satisfied the ruling for most of the EU member countries. The notable exception is the U.K. and Ireland, where 27% of titles are European. France is also slightly under, as are minor markets Belgium and Switzerland. With the 30% quota already being introduced in a number of markets, Netflix is now just a ‘rounding error’ away from meeting requirements across its entire European footprint, according to Ampere.

The shift to hit quota is recent. In December 2021, 16 of the 27 markets analized were under the quota. Even in the U.K. (which exited the E.U.), Netflix will hit 30% European content with the addition of just 408 European titles (or the removal of 953 non-European). Even fewer would be required for France, Belgium and Switzerland to reach 30%.

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“Quietly, while no one was watching, Netflix has boosted the proportion of its catalog titles that are European to the point where meeting new quota regulations should have no negative impact on its regional business,” Guy Bisson, research director at Ampere, said in a statement.

Bisson said Netflix reaching the milestone is a reflection of the service’s “heavy” investment in foreign content, which is rapidly being mirrored by other global streaming players.

Indeed, while Netflix is ahead of its global streaming rivals in programming European content, Amazon also exceeds the 30% quota in Germany, Switzerland and Italy and is on a par with Netflix in the U.K. with 27% of catalog titles being of European origin. Other Amazon markets range from 16% to 28% European.

HBO Max also has a large proportion of European titles in its local catalog, with the majority of its European footprint already exceeding 25% European. Disney still has some way to go, hovering around the 10% European mark. But like other studio and global streamers, Disney has recently been ramping up its European local original production activities.

The change can be viewed from two sides of the fence in terms of success. It either reflects the benefits of regulatory pressure in boosting the acquisition and production of European film and TV by U.S.-based players operating in the region, or it shows how global players are increasingly competing directly with local and regional players with content that was hitherto largely the stronghold of single-market local broadcasters, according to Ampere.

“Perhaps more surprising than Netflix’s 30% milestone is the fact that some of the newer major studio players are already rapidly approaching a similar proportion of European content in their local catalog,” Bisson said.

Ampere: Original Content Now the Majority of Netflix’s U.S. Catalog

The number of original and exclusive titles in Netflix’s U.S. content catalog in March accounted for more than 50% of all available content for the first time in the company’s history, according to new data from Ampere Analysis. There are now more than 3,700 original-branded movies and TV shows among the streamer’s 7,000 U.S. titles over the last three years.

Notably, Netflix is second to Apple TV+ in its focus on original-branded content, but far ahead of longtime SVOD rivals Amazon Prime Video (9%) and Hulu (4%).

In September 2016, when original content accounted for only 5% of its domestic catalog, then CFO David Wells set a target of a 50/50 split between original and licensed titles within the next few years. This transition to majority original titles is a product of Netflix’s market-leading spending of more than $6.2 billion on original content in 2021 — more than double the next highest spender, Disney+, at $2.8 billion.

“The rise of studio-led direct-to-consumer platforms has led to a shrinking pool of licensable content as studios prefer to keep productions in-house,” analyst Joe Hall said in a statement.

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Ampere contends that Netflix original content accounts, on average, for 12% of the 100 most popular titles available on SVOD in the U.S., the highest share of any streaming platform. Notable titles include the final season of crime series “Ozark” and the second season of period drama “Bridgerton,” which recently became the most-watched English-language TV series on Netflix.

Under current growth rates, Ampere estimates that 75% of the movies and TV seasons available on Netflix will be either originals or exclusives by the end of 2024.

“Original content also allows platforms to offer exclusive titles internationally without additional licensing costs,” Hall said. “This is particularly important as Netflix sets its sight on acquiring more international subscribers to compensate for maturity in developed markets.”

Ampere: AVOD Services Grew Original Content by More Than 100 Titles in Past Two Years

Major advertising-funded VOD platforms have joined the original content goldrush, with services such as Roku, Tubi and IMDb TV collectively releasing more than 100 new original titles in the past two years, according to a new report from Ampere Analysis.

Also, U.S. AVOD services with the highest investment in original content have seen the largest growth in usage, according to Ampere. Tubi, which has launched 20 original titles, saw monthly usage grow by 164%, by Ampere’s estimates, between Q3 2020 and Q3 2021.

AVOD originals cannot compete with titles from larger SVOD services, which are also creating more originals. AVOD platforms can’t match the billions of dollars spent by the leading SVOD players in the creation of original content, according to Ampere. AVOD services are smaller in scale, and the advertising business model will struggle to justify the sorts of multi-million-dollars-per-hour content investments which the leading SVOD players have applied to new flagship titles. However, according to Ampere’s analysts, one fundamental calculation for investing in original content remains true for both service types: As platforms expand globally, original content investments scale well. Investing in originals is a consistent way to offer exclusive content worldwide without incurring additional licensing costs in each market, according to Ampere.

Additionally, while AVOD originals do not yet provide enough of a draw to pull viewers away from larger SVOD platforms entirely, they do differentiate services within the increasingly fragmented AVOD market, and offer a reason for viewers to choose one service over another, according to Ampere.

Roku has invested more extensively in original-branded content, in part because of its acquisitions of Quibi’s content assets and its focus on low-cost-per-hour content. Of the six most popular AVOD platforms in the United States, Pluto TV is the only one not to have invested meaningfully in original programming — although it is in a position to take advantage of the programming slate of its parent company — Paramount — and outside the United States has become the temporary home for hit Paramount originals such as “Star Trek: Discovery.”

“Despite AVOD originals not having an impact in the wider streaming market — largely limited by their current lack of reach — AVOD platforms should not stop their investment,” said Joseph Hall, analyst at Ampere Analysis, in a statement. “Our analysis shows that the AVOD platforms with the highest growth in use since Q3 2020 are those with the most released or announced original programming.”

Almost Half of Studios’ First-Run Shows in 2021 Were SVOD Releases

Original content is getting pushed toward SVOD. That’s according to Ampere Analysis, which says the five largest U.S. content distributors have increased the proportion of their original shows premiering online.

Disney and WarnerMedia led the way with a strategic shift several years ago, while Comcast and Discovery were later to the game, catching up in 2021, according to Ampere.

Discovery, in particular, has rapidly switched strategy, moving from having a minimal focus on VOD originals in 2019 to placing the greatest emphasis on streaming originals. In 2021, nearly half (48%) of its first-run commissions were for VOD platforms, primarily Discovery+.

Having entered the SVOD market early with CBS All Access, Paramount now lags its studio rivals with only one third of commissions going to VOD. Time and resources over the last two years has largely been spent readjusting content priorities among its cable assets post the 2019 Viacom-CBS merger, according to Ampere.

“Original content is crucial to the success of any SVOD service,” Fred Black, research manager at Ampere Analysis, said in a statement. “And alongside increasing the volume of streaming originals, the studios are using a strategy centered on adapting existing IP, spin-offs, and reboots in their efforts to migrate loyal cable and movie audiences to the new ecosystem. Franchise character spin-offs have proved enormously successful for Disney+, with titles such as ‘The Mandalorian’ and Marvel series like ‘Loki’ and ‘Wandavision’ boosting the service’s early audience growth.

“The other studios have taken note; spin-offs from Food Network cooking competition ‘Chopped’ and TLC stalwart ’90 Day Fiancé’ are increasingly housed on Discovery+, and while Paramount Network’s blockbuster hit ‘Yellowstone’ is currently streaming on Peacock due to a preceding deal, the after-show reaction series and dramatic spin-offs will be found on Paramount+.

“Reboots are another way to capture audiences from elsewhere and head up HBO Max’s slate with series like ‘And Just Like That …’ and ‘Pretty Little Liars.’ Don’t forget the power of kids content in the streaming game too; Peacock is betting heavily on Dreamworks Animation’s library of IP for new animated series.

“All of this poses a problem for incumbents like Netflix and Amazon, which find themselves needing to build out franchises at an accelerated rate to compete, through a combination of buying up existing IP like ‘Lord of the Rings,’ the Roald Dahl books, or ‘The Witcher,’ as well as leveraging existing hits like Amazon’s ‘The Boys’ or Netflix’s ‘Selling Sunset’ to the maximum extent through multiple spin-off series to keep pace.”

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Ampere Analysis: Binge Viewing Ups Subscriber Churn

New data from Ampere Analysis contends binge-watching increases monthly subscriber churn (members not renewing service), which has resulted in newer SVODs such as Disney+, Paramount+, Apple TV+, Peacock and HBO Max returning to the old-school broadcast television norm of weekly episodic releases.

Binge viewing began with the TV DVD phenomenon of the early 2000s. Netflix lifted the concept so streamers had the option of consuming an entire season of TV episodes in one sitting. This release strategy has since been mimicked by Amazon Prime Video and Hulu.

Rahul Patel, senior analyst at Ampere, believes the return to weekly releases had as much to do with upstart streaming services not having the library of original content that Netflix has. At launch, the Disney+ original content library was 90% smaller than Netflix’s, while HBO Max’s was 74% smaller and Apple TV+ more than 99% smaller.

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Patel contends that’s why Disney+ released episodes of new Marvel Cinematic Universe TV shows across 34 weeks in 2021. Citing internal research, Patel found that Netflix’s practice of dumping a program’s entire season of episodes at launch led to 80% of the show’s viewers exiting the program after one month. By comparison, weekly episodes kept viewers engaged for four months.

“A weekly release pattern more easily facilitates conversation around a show,” Patel said in a statement. “Between episodes, viewers have ample time to discuss and re-watch episodes, which is less likely to be the case if an entire season is released together.”

The analyst also suggests that weekly releases can benefit lower profile titles — particularly those not based on recognizable intellectual property — as positive word of mouth sentiment has more time to build and spread.

“By releasing the totality of an unknown season in one stroke, a platform runs the risk of the title being crowded out in an increasingly competitive content market,” Patel said.

Report: 50% of U.S. Population to Stream AVOD Content by 2026

With subscription streaming video platforms embracing ad-supported distribution, new data suggests upwards of 50% of Americans (171.5 million) could be streaming AVOD or free ad-supported streaming television (FAST) content by 2026.

In a report, eMarketer.com found that services like Disney+, Peacock, HBO Max and Paramount+, among others, have invested in ad-supported video channels (some locked behind subscriptions and others available for free). With few viewers loyal to just one streaming service, separate data from Ampere Analysis found that 25% of U.S. internet users use a mix of advertising-based and subscription-based video-on-demand services.

As streaming services are battling competition on multiple fronts, ad-supported tiers, with a softer entry price, are yet another option that allows competitors to appeal to both cost-conscious consumers and advertisers looking to reach audiences inside walled gardens.

Daniel Konstantinovic, author of the report, said that the angle for streaming services going forward is to replicate platforms such as Amazon Prime Channels or Verizon’s new +Play platform that puts their (Prime and telecom) subscribers in front of customer-friendly offerings like cheaper or free viewing channels, as well as major content releases.

“Verizon … is using +Play not only as a convenient subscription service management platform for customers, but also as a way to promote deals it has with streaming services like Disney+,” Konstantinovic wrote.