In episode one, we peeled back the data on the impact of releasing a show’s season all-at-once versus releasing an episode every week. Now, as the entertainment industry reels from the news of a growing pandemic, TV executives tell Parrot Analytics there is a growing need for newly-launched shows to build momentum among viewers for longer term business value.
What do Insiders Predict about Release Strategies in 2020?
Prolonged release schedules for new shows may offer up higher returns and longer customer lifetime value for streaming platforms when compared to binge release models (where shows are released all-at-once), according to SVOD executives Parrot Analytics has spoken to. And what’s more, they believe that new streamers are unlikely to follow Netflix’s lead on the bingeable model in the coming year.
This factor has remained unchanged for the executives despite the upheaval the coronavirus pandemic has caused the entertainment industry. While, as shown in part one of the Release Strategies for 2020, the binge model could offer up some advantages like acquiring new subscribers, the executives have said that changing consumer behavior and more competition will mean that streamers stick to a slower release model.
The economics of bingeable content
The economics of the binge model means that few companies outside of Netflix are likely to try to consistently release new programming in bulk, according to the executives.
Netflix, which created the binge-watching model when it released House of Cards as an entire, ready-to-watch, series in 2013, has expanded its debt figures year-after-year as it attempts to keep up with the demand of stacked programming. Currently, it has racked up near $3.3bn in negative cashflow and is showing little sign of slowing down.
As revealed in part one of Release Strategies for 2020, bingeable shows offer up a short, sharp spike in attention, which then drops off dramatically. With slow release shows, however, viewers are asked to come back week-after-week for a prolonged length of time. This means that streamers attempting to launch new shows in a bingeable fashion must create more programming throughout the year to keep viewers engaged and on their platform – an expensive endeavor, as Netflix has shown.
“The binge model is a brilliant consumer experience on the surface, but weekly distribution makes more business sense,” says Ed Simpson, chief strategy officer at Brent Montgomery’s Wheelhouse Group. “You’re able to keep people coming to your platform for a longer period of time, at a much lower per week cost.”
Up to now Netflix has been able to sustain this debt because of its astronomical growth in the space of a decade, which has seen it amass 167m subscribers around the world. However, new entrants to the streaming space such as Disney and AT&T – which is soon to launch the HBO Max platform via WarnerMedia – have little leeway when it comes to debt because they spent billions in acquisitions to enable and scale their new platforms. Morningstar figures show that Disney is holding $48bn in long-term debt after its $71.2bn acquisition of 20th Century Fox, while AT&T is grappling with $184bn in debt after its Time Warner and DirecTV purchase. Additionally, these platforms have large decades-old libraries to borrow from, which means that they will not need to fill out their platforms with new programming like Netflix has needed to do in the past couple of years.
“Netflix has taken a strategy that monopolizes the entire content space by paying a lot of money for content and delivering it in a way that is really beneficial to consumers,” says an SVOD executive who has advised on Hulu and HBO Max’s release strategy, but prefers not to be named. “A lot of folks have followed this Netflix model, and it’s almost been like a trick, because unless you’re making as much content as Netflix – and they are rolling shows out like most others roll out episodes – or unless you’re going to spend that much money, it is silly to roll things out in a binegable fashion.
“Netflix will continue to produce bingeable programming and use it as a unique value proposition, but I don’t expect many others are going to follow - and they shouldn’t,” says the executive.
Breaking through in a crowded space
Simpson questions the long-term sustainability of the binge model. He says Wheelhouse – which works heavily with celebrity partnerships and brands – believes that some talent have concerns around the lack of exposure they may get from their content dropping all at once on streaming platforms versus the more traditional model of weekly episodes.
“When you dump all the content simultaneously, we see a spike in social media conversation around the show, and then it dramatically tapers off. Whereas when you look at the conversation around linear distribution, we see it becomes far more drawn out and extended,” he explains.
“It’s an obvious point, but the impact from the perspective of talent is that it’s great for everybody to talk about you for a week, but it’s even better for everybody to talk about you every week.”
When Parrot Analytics examines digital original new debuts of 2019 with 10-13 episodes in Chart 1 above, weekly releases were more in-demand than their binge-release (i.e., all-season release) counterparts and extend their demand for longer (week-over-week) post release. (See below for Chart 1’s methodology)
The same goes for marketing. Simpson says there’s a reduced level of personal recommendation between viewers because the conversation around a binged-show dies quickly after it’s launched. “But as the competition racks up, [streamers] are going to need to have support from word-of-mouth as much as they need an advertiser.”
Consumer behavior is changing
The binge-model has seen its stratospheric rise because at its core it is an experience that benefits the consumer and enables them to watch the shows they like at whatever pace they like. However, there have been some repercussions as a result of this.
”Binge-viewing has meant a smaller volume of people are talking about specific programs because we’re all on different viewing cycles,” says Simpson.
“If you look at The Mandalorian; that became a hit overnight for Disney+, which, at this stage, also has much less content than Netflix. Only a handful of original shows have broken through via the binge-model on the other hand, so when you look at the overall volume of content versus hits, the ratio is not completely balanced.”
Even superhits need momentum, according to the executive. Dropping a season out in one fell swoop doesn’t only thwart conversation around it in the short-term, but also between seasons. “It can be very difficult to get an audience back to experience a new season of a show, especially when production cycles are long. When a significant time has elapsed, the audience may also have moved on to other content. One solution buyers may look at is ordering multiple seasons of a show at once,” he says.
When Parrot Analytics evaluates the longevity of multi-season digital originals that released a season in 2019, weekly releases over-index, maintaining audiences attention and thus demand longer than binge-releases (i.e., all-season release). (See Chart 2’s methodology below)
The Hulu and HBO Max advisor says the aim should always be to maximise the value of new content and have viewers come back repeatedly for “whatever makes them feel good about paying a subscription”.
“I think increasingly, it’s going to become a lot less about binge versus weekly rollout, and more about what these platforms put in front of, or behind a paywall,” he says.
It’s a point that has never been more relevant, as streaming services such as HBO Go, Showtime, the WWE Network, Sundance Now and Sling TV offer free content and extended trial periods to consumers while they spend more time indoors as a result of the coronavirus pandemic. During this period, quite simply, how free content in managed is becoming a differentiating factor and selling point for streamers.
A period of experimentation
While the experts are agreed that additional binge-only platforms are unlikely to arise in the coming year, they do believe that the industry is in a period of deep experimentation. With platforms such as Quibi, Peacock and HBO Max all ready to launch over the next few days, there may be an entirely new take on what an episode or season will look like.
Michael Iskas, the president of reality TV producer-distributor The Story Lab, says: “There’s so much experimentation happening right now, even outside the Netflix, Amazon and Quibis of the world. “
“There are new global and regional models emerging. In the AVOD space you see companies like Rakuten creating unique experiences, or in the SVOD sports space, companies such as DAZN are consistently innovating. That makes it challenging to predict how our viewing models will look in a few years, but also very exciting for companies wanting to try new ways of making and telling powerful stories.”
Even Netflix has been creating a mix of both bingeable and weekly-release programming in recent days. A company spokesperson told Parrot Analytics: “We are always trying new ways to give fans more of what they love and finding the best experience that makes that possible. Some of the things we’ve tried in the past include batching Chelsea archive episodes into a “Best Of” collection through to weekly roll outs of originals like Patriot Act with Hasan Minhaj and Bake Off. But our overarching strategy of releasing all episodes in one go has not changed.”
Simpson echoes the point. “We had a very confined corridor of linear TV over the last 50 years and I think we’re now going to see big experiments.”
“What technology is allowing us to do is consume content in more parts of the day. We no longer just sit to watch TV from 8pm-10pm at night, we’re consuming content at all different times and in different ways, and so the distribution of content will continue to mirror that.”
Our industry insiders are clear that releasing newly-launched shows in an all-in-one format is unlikely to stretch across the majority of streamers joining the space today. They do believe, however, that platforms are finding new and creative ways to draw viewers in.
So, does the data support the trend toward experimentation? And who is engaging in this the most? In episode 3, Parrot Analytics examines trends in supply and demand of content by release strategy.
Parrot Analytics’ dataset of new debuts released in 2019 was categorized into those which released an episode weekly (excluding at launch) and those which released all-at-once or binge. Of those, the dataset was subset into digital original new debuts with 10-13 episodes in their season (N=43). This subset was chosen such that all episodes, regardless of release, had the potential of being consumed within 90 days of release.
Brief Data Descriptives:
- 70% were binge release and 30% were weekly release
- 53% were Netflix originals and and 47% were from other OTT platforms
- 33% were comedies and 28% were dramas, making them the top 2 genres and the majority of titles
Parrot Analytics’ dataset of all multi-season digital originals which released a season in 2019 and had 10-13 episodes (N = 54) were evaluated for their longevity at the end of Q1 2020 or as of March 31st, 2020. Longevity is calculated globally and indexed to all titles in the Parrot Analytics database.