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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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: Top Streamers to Slow Content Spend in 2023

The major global streaming platforms (Netflix, Amazon Prime Video, Disney+, Apple TV+, Paramount+ and Max/HBO Max) will invest $42 billion in original and acquired film and TV content in 2023, Ampere Analysis forecasts.

This marks a slower rate of growth of 7% year-on-year, compared to the 24% growth in streaming spending witnessed in 2022. High-budget originals in key scripted genres, including crime and thriller, sci-fi and fantasy and comedy continue to be the primary drivers of growth. However, in light of intense competition and the influence of macroeconomic factors, SVOD platforms will prioritize cost management and effective content acquisitions to thrive in 2024 and beyond, according to Ampere.

Of the $42 billion in SVOD content spend dedicated to TV series and films, 90% is projected for scripted. The crime and thriller genre tops SVOD spending, with investment expected to hit $12 billion this year. The sci-fi and fantasy and comedy genres also command substantial funds, emphasizing that high-budget scripted TV content remains the most powerful tool for attracting subscriptions and maintaining subscriber engagement. At a platform level, Netflix and Amazon Prime Video have adopted a balanced approach to genre allocation, leveraging their scale to cater to the preferences of diverse demographics, according to Ampere. Other SVOD players have pursued more targeted spending strategies, focusing on key genres and IP to cultivate loyal subscriber bases, Ampere reports. Apple TV+ has dedicated 40% of its budget to crime and thriller titles, building on past successes such as “Slow Horses” and “Severance.” Disney+ has prioritized the sci-fi and fantasy and children and family genres, anchored by TV spin-offs from the “Star Wars,” MCU and Pixar franchises.

Streamers are increasingly turning to entertainment and reality as their budgets tighten and they search for subscriber engagement at a lower cost, according to Ampere. Spending on unscripted content by SVOD platforms is set to hit $4.9 billion this year, growing by 22% year-on-year, vastly outpacing the overall rise in spending by global streamers. An initial focus on documentaries has expanded to encompass entertainment and reality, with a particular focus on both producing and acquiring dating, talk show and game show formats.

Exclusive original titles have fueled the growth of content budgets for global SVOD platforms, accounting for 67% of the film and TV spend in 2023. However, the spotlight is shifting toward content acquisition strategies, poised to play an increasingly vital role, according to Ampere. The content acquisition spend for major SVOD platforms is projected to grow by 5% next year, reaching $14.8 billion. Crime, romance and drama genres lead in acquired content spending, offering substantial potential for cross-border content licensing. In pursuit of cost-effective library expansion, compounded by industry strikes in the United States, SVOD platforms are looking to success stories such as NBCUniveral’s “Suits” and HBO shows “Band of Brothers” and “Insecure” on Netflix.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“In 2023, we forecast that major global SVOD platforms will collectively invest $42 billion in film and TV content,” Neil Anderson, senior analyst at Ampere Analysis, said in a statement. “The moderated spending growth rate in comparison to previous years underscores the maturity of the SVOD market and the importance of strategic spending across genres. At $15 billion, Netflix will retain its position as the top investor in global streaming content, albeit with a modest 2% increase. Meanwhile, rivals such as Disney+, Paramount+ and Apple TV+ are poised for more substantial budget expansions, projecting year-on-year increases exceeding 10%.”

Ampere: Rate of U.S. TV Commissioning Dropped Significantly in Second Half

As a writers strike threatens to bring content production to a halt for some time, a new report from Ampere Analysis found the rate of TV commissioning in the United States dropped significantly in the second half of last year, and continues to remain low in 2023.

The downturn is most profound for scripted content, with scripted TV commissions in the past three quarters down by 24% year-over-year — with overall volumes even lower than during the COVID pandemic. 

Audiences will feel effects of a content deficit later this year, according to Ampere. To-date, the time lag between commission and release times means that although commissions have been lower, audiences have yet to see the full effect on TV schedules. But low commissioning now will create a future content deficit, with the slowdown likely to start to bite in Q3 2023 and beyond.

Ampere outlines two possible scenarios. In the first, if commissioning rates recover soon, audiences will see between 5% and 7% fewer scripted releases each quarter between now and Q2 2024, when the effects will ease. In the second scenario, if commissioning continues at current levels, audiences will start to feel a much greater impact toward the end of this year, with 16% fewer releases expected in Q4 2023 and 20% fewer from Q2 2024 onwards.

“Scripted commissions at flagship subscription video-on-demand (SVOD) services are definitely feeling the impact of budget cuts — and the studios aren’t only cutting back at their streaming platforms, with pay TV networks like TBS, FX, OWN, Freeform, Nickelodeon, Comedy Central, BET and AMC all reducing scripted commissions by over 50% when comparing the past nine months with the previous period,” Fred Black, research manager at Ampere Analysis, said in a statement. “There’s one big exception however — Amazon — which is capitalizing on cutbacks made by rivals by increasing commissions of comedy and sci-fi and fantasy shows. Investing in scripted commissions now can pay off doubly for those willing to gamble, as the extra commissions will hit the market just as the output of original content from rivals drops to its lowest levels early next year.”

Although the decline of unscripted commissions was severe across SVOD and pay-TV, SVOD services have been the biggest loser, with commissions down 33% over the past nine months versus the same period in the previous year, with 151 fewer titles commissioned. On the other hand, advertising supported video on demand (AVOD) and free ad-supported streaming TV (FAST) commissioners have provided a bright spot in the gloom with 83 unscripted commissions over the period, 6% of all unscripted activity in the United States in that time.

Warner Bros. Discovery’s (WBD) merger has created an unscripted behemoth — but one that the company is looking to slim down, noted Ampere. The drop in unscripted commissions overall can be largely attributed to WBD. Between July 2022 and March 23, there were 241 fewer unscripted TV commissions in the United States: WBD Unscripted commissions accounted for 172 of them, a 32% drop for the company’s unscripted commissions overall, with cuts occurring at both its pay TV and particularly SVOD platforms. The drop across the market outside WBD is only 6%. Unscripted content was trimmed at Paramount and Comcast, too, by 16% and 13%, respectively, while at Disney unscripted output actually increased, primarily via Hulu.

“While the commissioning cutbacks in unscripted content at the dominant pay TV and SVOD platforms have been severe, there is a sense of balance being restored after a significant pandemic peak,” Black said in a statement. “COVID-19 saw unscripted commissions soar out of necessity due to production complications, and then continue at a high level due to a surprisingly enthusiastic audience. What we’re seeing now is a course correction. Unscripted commissions in the U.S. were down 16% over the last three quarters compared to the previous year, but compare it to the same period in 2019 and early 2020, and the drop is only 1%. There’s also optimism in the growing number of commissions from AVOD and FAST platforms, showing that while some SVOD services may have over-leveraged on unscripted content, there are plenty of nascent players still investing.”

Ampere: Paramount+ Best Value Streaming Service in U.S.

Priced at $6 but with a content value of more than $8.50 a month, Paramount+ is the best value streaming service in the United States, according to the latest “Popularity and Critical Rating” data from Ampere Analysis.

Disney+ is a close second with a content offer able to justify its recent $3-a-month price increase for the ad-free tier. 

Paramount+’s overall content offer is boosted by the breadth of its diverse content catalog and the popularity of several hit reality-TV franchises, according to Ampere. In addition, it is supported by Paramount Global’s long-running crime drama series plus a strong mix of licensed movies and TV shows from other suppliers. Ampere’s analysis suggests Paramount+ has plenty of headroom for price rises while still remaining competitive with its U.S. streaming peers based on its content offer.

The analysis assesses the contribution made to the market value of different content suppliers, both in-house and third-party. Paramount Global productions contribute the most to the value of Paramount+ at 40% of the market value. Licensed classics including “The Brady Bunch” and “Star Trek: The Original Series” pack a punch, generating 28% of the market value, despite contributing just 9% of the titles available on the platform, according to Ampere.

In-house crime and thriller titles are the most valuable per title to Paramount+ with classics such as The Godfather, “NCIS” and “CSI.”But Paramount Global-produced children and family titles add considerable value to a different, younger audience segment with titles such as “Avatar: The Last Airbender” and “iCarly.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Disney is the only other major U.S. streamer analyzed that had such a stark price-to-market value disparity, according to Ampere. Although pursuing a very different content strategy, Disney is buoyed by its big-name franchise content and IP with Marvel Cinematic Universe titles contributing the most value relative to volume within the content offer. Other Disney-owned content, primarily children’s live-action and animation, are the single largest contributor to value, driven by the volume of Disney’s archive. But even Disney+ still derives 30% of the value of its content offer from third-party licensed content, according to Ampere.

“As a later entrant to the U.S. streaming market, Paramount+ is maximizing great value as a marketing tool relative to some of its more established peers,” Ben French, analyst at Ampere Analysis, said in a statement. “Simultaneously, it is also leveraging the substantial catalog and key reality and entertainment franchises of Paramount Global. Our unique analysis shows the huge importance of franchise content and film and TV based on character IP. It also highlights the ongoing importance of licensed content from third-party suppliers, not just to Paramount+ and Disney+ but to all the streaming services analyzed.”

Ampere: HBO Max SVOD Service Has Highest Level of Award-Winning Content

HBO Max is the SVOD service with the highest volume of award-winning content in the United States, offering just shy of 700 championed films and TV shows, followed by Netflix and Amazon Prime Video with more than 500 titles each. That’s according to a recent study by Ampere Analysis based on more than 35 international media awarding bodies.

In terms of concentration of award-winning content, HBO Max leads the rankings again, with one in five (21%) decorated titles in its library, besting the smaller Apple TV+ (19%). Netflix and Amazon Prime Video, though close-behind in volume, have a much lower density of award-winning content, at 10% and 7% respectively.

HBO Max’s critically acclaimed content is older, with almost three quarters of its award-winning titles more than 10 years old. These older award-winning titles are 79% movies, composed of Warner Bros’ sizeable movie catalog (137 titles) and content licensed through a partnership deal with The Criterion Channel (122 titles). Of the decorated TV Shows, HBO-produced titles make up the largest share (30%).

The 2022 Primetime Emmys saw HBO and HBO Max jointly claim a network-leading 38 wins across 13 shows. This included the most-decorated show “The White Lotus,” which won in 10 out of the 13 categories it was nominated in, as well as shows with multiple wins including “Euphoria” (six) and “Succession” (four).

Subscribe HERE to the FREE Media Play News Daily Newsletter!

“Platforms that focus on delivering premium, top-end content to viewers unsurprisingly have highly decorated, award-dense catalogs,” Joe Hall, analyst at Ampere Analysis, said in a statement. “The focus on quality over quantity is key to retaining and growing a subscriber base whilst maintaining a smaller library. With a shrinking pool of licensable content, emphasis should be placed on titles that consumers engage with long after the initial release. Those that are victorious at well-established awards ceremonies, such as the Emmys, not only prove their quality but can help to elevate a title’s profile to increase engagement.”

Ampere Analysis: Disney Leads in North America Scripted Content Race

Disney has taken a firm lead for scripted content in North America, having ordered more new scripted content by the end of September than it took in the whole of 2021, according to new research from Ampere Analysis.

Netflix has focused more on international with its scripted output falling by 15% in North America across the first three quarters, compared with Disney’s growth of 61%.

Warner Bros. Discovery and Paramount have also reduced U.S. commissioning, with Warner reducing its scripted outlay from 44 to 28 new series orders in the first three quarters (down 30%), and Paramount reduced from 54 series orders to just 29 (down 46%).

Mid-size players have shown the greatest development in North America in 2022. One example in this group is Apple, which this year to date is the fourth largest commissioner of scripted content in North America with 32 new series ordered, making it one of the global top 10 commissioners of scripted for the first time.

Disney’s global scripted original output will vastly surpass Netflix this year, having just slightly edged ahead last year, according to Ampere. Back in 2020, it had been nearly 70 shows behind.

Both Netflix and Disney will far outstrip the competition in terms of scripted output. Disney’s scripted commissions this year are up 28% compared to the end of Q3 last year, to 181. Amazon has recorded the strongest growth among all platforms and surpassed the major studios’ commissioning with some 76 titles to date (up 33%). As a result, Warner has dropped out of the top three scripted content commissioners ranking. Its strategy shift post-merger with Discovery means it is likely to be overtaken by Paramount and Comcast, according to Ampere

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In Western Europe, traditionally led by public service broadcasters, France TV is currently the largest commissioner of new scripted content with 40 titles so far this year, roughly level with its output at this stage last year. Netflix has risen to match this, also with 40, four more titles than this time last year. The biggest reduction in scripted commissioning has come from the BBC, which has fallen to third having been the biggest commissioner in 2021, with a reduction in scripted output of 20 titles compared to this stage in 2021 (down 37%). A change of hands is occurring between the major studios active in Europe too. Warner Bros. Discovery has reduced its scripted output in Europe 29% to date this year (15 titles this year to 21 last), while Paramount has more than quadrupled its commissioning (27 commissions compared to six at this stage last year).

“With public service broadcasters increasingly pulling back due to budget constraints, subscription video on demand (SVOD) platforms and studios are ramping up scripted output,” Fred Black, research manager at Ampere Analysis, said in a statement. “At the top of the tree,  Netflix is pivoting its originals strategy even further toward international commissions as it searches for subscriber growth, allowing Disney to catapult its way to the top of the scripted content commissioning via its base in the U.S., leaning on that volume for global content superiority. If Disney can successfully position its global portfolio of streaming services and cable channels in a way that suits consumers, it can claim original content supremacy over incumbent market leader Netflix.”

Gaming IP a Hot Commodity, According to Ampere Analysis Study

The number of adaptations of video game-based intellectual property (IP) by the TV and movie industries has been growing consistently over the past two decades, with 20 to 25 movies and TV series now released per year based on games, according to a new study by Ampere Analysis. The proportion of TV series in particular is increasing over time. 

An increasing proportion of these releases are attributable to subscription VOD platforms, such as Netflix and Amazon, which have been responsible for a number of original releases in the past five years, according to Ampere.

Historically, most franchise building across video and games sectors has focused on entertainment IP being adapted into spin-off games. In fact, over a 40-year period more than 2,000 games were released based on existing entertainment IP — movies, live-action or animated TV series and anime content. In the early 2000s, there were typically just a small handful of major adaptations based on video games, such as movies based on the “Lara Croft: Tomb Raider,” “Resident Evil” and “Pokémon” franchises.

However, since the early 2010s, the volume of game adaptations into TV shows and movies has been rising, peaking in 2016. Examples include the “Sonic the Hedgehog” movies and the “Arcane” animated TV series based on “League of Legends.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

This boom in game adaptations has occurred during a period in which spending on film and TV content is at an all-time high, but a lot of revenue (especially box office) is concentrated around a small number of franchises. These are mostly owned by the major studios, leaving SVOD platforms searching for new sources of inspiration. At the same time, there has been an explosion of valuable original IP in the game world, through games such as “Roblox,” “League of Legends,” “Fortnite” and “Minecraft.”

Several high-profile game adaptations have performed very well recently, Ampere noted. These include “Arcane,” which remained in the Netflix top 10 for six consecutive weeks, and Uncharted (Sony), which grossed more than $400 million at the box office globally.

“From a cinematic viewpoint, studios recognize the value of utilizing gaming IP and brand recognition with pre-existing fan bases,” Ampere Analysis research manager Lottie Towler said in a statement. “SVOD platforms meanwhile also see it as an opportunity to create new original-based TV franchises, that differentiate them from competitors in an increasingly competitive market.”

Quality of content based on games has been rising, too, which in turn helps to increase the potential audience, Ampere noted. Since 2017, titles have been both higher-rated overall and critics’ ratings are reaching parity with audience ratings, implying a marked increase in overall quality without sacrificing audience enjoyment.

“We expect further growth in cross-format IP, particularly generated from games, and there is a consistent upward trend in game adaptations,” Towler said in a statement. “Of the 118 commissioned titles tracked since Q4 2018, just over half (63) are yet to be released, meaning the number of game adaptations available to consumers is only going to increase.”

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.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

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.”