Circana: Content Monetization Key Industry Turning Point in Mature Streaming Market

Universal Pictures’ expedited offering of current 2023 box office champ The Super Mario Bros. Movie into digital retail channels underscores Hollywood’s attempt to rejigger content distribution across multiple channels to an evolving fragmented consumer.

The strategy aims to transition away from an all-consuming streaming endgame and jumpstart “old-school” transactional opportunities beyond theatrical, including re-releasing related catalog content, and altering streaming service bundles.

Disney is now bundling Disney+ and Hulu into a single app, on top of the existing Disney+, Hulu and ESPN+ bundle.

“We’re in the middle of the ‘great re-bundling’ … which means broader [content] distribution,” John Buffone, VP, industry advisor with research firm Circana, said May 16 on the DEG: Digital Entertainment Group’s “B-L-D Hour” webcast.

Facing a mature streaming market and significant direct-to-consumer fiscal losses, studios and media giants are looking for ways to cut costs while maximizing viewer engagement and content monetization opportunities, including non-exclusive content license agreements with third-party platforms.

Circana analyst John Buffone

While domestic SVOD services gained more than 6 million combined subscribers in 2022, the streaming market through the first quarter of this year has largely stabilized, with daily usage levels only changing marginally among the top 10 subscription streaming video services, Buffone said.

Indeed, just Netflix, Paramount+ and NBCUniversal’s Peacock saw incremental (1%) engagement increases through March compared to declines among their competitors (Hulu, Disney+, Discovery+, Prime Video, ESPN+, and Apple TV+). HBO Max remained flat.

The analyst said the outlier days of the pandemic when Netflix saw an increase of 3.5 billion hours in viewership year-over-year are over, with Q1 SVOD revenue growth largely driven by price hikes among the streaming services.

At the same time, U.S. SVOD household penetration continues grow slowly, reaching 88%, or about 100.3 million homes, which is up 2% from six months ago. Another 62.4 million households use free, ad-supported platforms. The average video consumer uses 4.8 SVOD platforms and 3.6 free ad-supported services — the latter up 3% from six months ago.

Buffone said that 52% of households use both SVOD and FAST, which is up from 49% six months ago, adding that both services are generally reaching many of the same viewers.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

He added that while there are incremental usage changes between the platforms, in reality the data suggests that the subscriber bases across the services are watching a similar amount of content and time spent on a platform as they were before.

“As the streaming market is moving through the backend of the adoption curve [and] engagement is stabilizing, there are some opportunities here,” Buffone said. “There’s more avenues for distributing programming. There’s more avenues for non-exclusive licensing — part of that is the proliferation of free, ad-supported streaming in the market place.”

Notably, Warner Bros. Discovery earlier this year inked non-exclusive license deals for legacy HBO content, including “Westworld,” for distribution across The Roku Channel and ad-supported Tubi platform.

Buffone said recent data shows that among viewers aged 35-54, an identical 37% of consumers use SVOD, FAST, buy/rent premium and standard digital movies.

“This is a pretty significant demo,” said the analyst. “This is a result of [an older demographic] stepping up” to embrace wider content distribution. “This continues to be a bright spot.”

DEG Expo on Feb. 25 to Focus on ‘Maturing D2C Landscape’

Josh Reader, president of Distribution and Development at AMC Networks, will be a featured speaker for DEG: The Digital Entertainment Group’s next DEG Expo, set for Feb. 25 at 10:30 a.m. PT. Reader will chat with Looper Insights CEO Lucas Bertrand about marketplace dynamics for targeted direct-to-consumer services in 2021 and beyond.

The topic of the Feb. 25 DEG Expo is “The Maturing D2C Landscape,” with a particular focus on the targeted services landscape and the role connected devices play in the consumer experience. The program was developed with DEG’s D2C Alliance Council working group, which represents the global direct-to-consumer entertainment industry and supports its members to help create a robust marketplace to lead the new era of content consumption.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In addition to the Reader-Bertrand chat, the Feb. 25 DEG Expo also will present a panel discussion on the connected device experience, with Susan Agliata, director of Business Development, OTT Partnerships at Samsung; Ben Maughan, VP of New Ventures and Strategic Business Development for TiVo (Xperi); and John Buffone, executive director and industry analyst, Connected Intelligence, with The NPD Group. Other speakers include Kevin Westcott, vice chairman and National TMT Leader, Deloitte, who will present research on subscription churn; Andrea Downing, co-president, PBS Distribution; and DEG president and CEO Amy Jo Smith.

DEG launched the DEG Expo series last year to provide its members and the industry with education and community building opportunities through curated virtual events offering diverse perspectives on topics relevant to the digital media industry.

To learn more about joining the D2C Alliance or how to participate in this week’s D2C Expo, please contact Shannon Gregory at Shannon@degonline.orgRegister for the DEG Expo: The Maturing D2C Landscape here. See the full agenda here.