Image: Red Notice, Netflix
Good morning and welcome to the new and improved Parrot Trends newsletter! We hope you’re coming off a wonderful Ramadan in which the super-charged slate of excellent programming connected with viewers. Today, we’ll jump into a few Netflix-specific points ahead of this week’s earnings, explore a few
industry-wide strategic shifts, and poke around the MENA region for content
insights. Shall we dive in?
1. Netflix’s Shifting Film Strategy -- Under former film head Scott Stuber, Netflix delivered an average of more than 221 scripted original films across all languages in the US from 2019-2023, including upwards of 80 English films per year. Under new movie shot-caller Dan Lin, both numbers are expected to be reduced…significantly. Why? Because Netflix is growing out of its infancy and into its adolescence as a film studio after spending the last decade gobbling up market share like a Hungry Hungry Hippo. That means profitability is taking precedence over raw viewership to a certain extent as evidenced by the reports that Netflix will focus on mid-budget comedies, romcoms and family families. Sure, the company will still dabble with blockbusters and prestige fare, but not at the carefree volume of the last five years.
The question is, will this exchange have a material impact on Netflix’s
market-leading 8.2% share of total platform movie demand (which includes
licensed titles)? If so, does it risk losing subscribers to legacy players like
Disney+ and Max that are backed by powerful IP-fueled movie studios? There’s a
give and take with every strategy.
Ideally, Netflix reroutes some of the programming budget that was being funneled to all those original movies back into select TV investments, which are a for more
efficient use of resources. Be on the look out for a deeper dive into this
topic in an upcoming Parrot Perspective.
2. Contextualizing the Netflix Bump – There’s been a lot of chatter
recently about the famed “Netflix Bump,” or even lack thereof, after Peacock
original Grls5Eva was rerouted to the streamer for its recent third season…and promptly failed to drum up much interest. Yet this is on brand for the various windowing and syndication of programming. Netflix’s homepage is undoubtedly the most valuable real estate in Hollywood and scale can always help well-liked series grow in awareness and reach. But turning unpopular shows into newfound hits has never been part of TV’s DNA, linear or otherwise. Even cancelled series that Netflix rescued – Manifest, Lucifer, You – were drawing millions of viewers
on linear while more critically acclaimed niche series such as Breaking Bad had
found an audience before benefitting from Netflix. The same goes for licensed series such as Suits, which enjoyed a very successful long-term run on linear before ever coming to the streamer.
3. Streaming Awards Shows – According to a recent Parrot
Analytics Sentiment Analysis to unearth what consumers like and dislike about
major televised Hollywood awards shows, younger cord cutters are frustrated by
the lack of digital access. At the same time, streamers are increasingly programming like their linear counterparts, which includes securing the rights
to live events such as sports, news and awards shows. Amazon’s most recent
airing of the ACM Awards secured 7.7M viewers, an uptick from its final year on
CBS in 2021 (6.1M). Netflix exclusively aired the SAG Awards earlier this year.
This coincides with rising demand for awards shows over the last five years. If
streamers can prove to advertisers that sizable audiences (and younger viewers)
will follow awards shows on their platforms, it will expedite the medium’s
takeover of the TV experience. In the meantime, meeting younger consumers where they are on digital improves the value perception of your brand. The great
migration is here.
4. Simulcasting Works (Of Course) – It turns out that aggregating more than one distribution pathway for audiences can help secure a lot of eyeballs. Who would have thought?! (Sarcasm heavily implied). Quiet on Set, the shocking expose about Nickelodeon’s toxic working environment under producer Dan Schneider, aired on both the linear Investigation Discovery channel as well as Max. Similarly, Shogun is available on both Hulu and basic cable network FX. Both series have done well critically and commercially. While quality is always a driving factor behind success, simulcasting on multiple entry points is a strategic way to capture as much attention as possible, yet has yet to be fully embraced by the industry. Disney only aired episodes of streaming original series Andor and Ms. Marvel on linear after their respective runs (and to fill time during the strikes). The same goes for CBS and Taylor Sheridan’s Paramount+ series. But launching shows upfront across multiple networks can help attract a large audience that can then be converted into streaming subscribers while also increasing advertising inventory. Why it’s not common practice remains inexplicable.
5. MENA Content Supply Breakdown – When looking at the supply of TV
titles available in Egypt, Saudi Arabia and the UAE over the last three
quarters, the genres that hold the largest shares are Drama (19%), Comedy
(13%), Animation (9%), Romance (7%) and a tie between Documentary/Fantasy (both at 6%), according Parrot Analytics’ Content Panorama. In terms of the top
suppliers of TV titles in the region, Netflix (19%), Amazon (4%), AT-X (3%), igiyi (2%) and MBC (1%) stand out. While a mix of both can provide a broader catalog of programming at different budget levels, it’s clear that scripted programming (79%) has a clear edge on unscripted (21%) in terms of both supply and demand, as the former also accounts for the majority of the 50 most in-demand titles in the region. Understanding supply is arguably just as important as demand, allowing you to get out ahead of over and under-saturation trends.
6. WBD Speculation – As of this month, Warner Bros. Discovery is legally allowed to seek out another major merger and acquisition opportunity without facing a massive tax penalty. The company has publicly pulled out of the Paramount Global sweepstakes, but that doesn’t mean the conclusion to that ordeal won’t play a role in WBD’s future. Whether or not Paramount’s sale runs smoothly will shine a light on regulator’s appetite for major M&A in the media space. More importantly, it’s fair to wonder if the loser of the Paramount Global sweepstakes – which is currently between Skydance and Apollo – will then sniff around WBD instead. On the bright side, Zaslav and Co. are pushing the business toward streaming and studio profitability. However, $40 billion in debt may be untenable for any takers and it’s not as if Zas’ army has brought any innovative strategies to the industry other than removing programming for tax write offs. More realistically, WBD may be staring at a future in limbo, at least in the short- to medium-term.
7. Evaluating Video Game IP – Of the 10 most in-demand video game TV adaptations of all time, seven have been released since 2018. These include HBO’s The Last of Us, Netflix’s The Witcher, Arcane and Cyberpunk: Edgerunners, Paramount+s Halo and Peacock’s Twisted Metal.
At the same time, the genre has begun to find steady success on the big screen
with Paramount’s Sonic the Hedgehog franchise and Illumination’s The Super Mario Bros. Movie. It’s clear that the once derided genre has finally hit its stride after 30 years of false starts. Yet as major long running franchises across the big and small screens begin to decline and/or conclude, video game IP may not necessarily be the automatic replacement. The majority of the top selling games of all time have already delivered or will soon be delivering mainstream adaptations. Blumhouse’s Five Nights at Freddy’s is a good example of how to leverage younger-skewing IP on a budget for quality profitability. But, outside of Illumination burgeoning Nintendo-verse, it is not remotely a replacement for tentpole franchises such as Marvel, DC, Fast & Furious, or Jurassic World. Video game IP may be more finite of a resource than Hollywood initially hoped – at least as it pertains to the next crop of blockbuster franchise titles.
8. Peacock Prowess – As an ad-supported first platform, Peacock – which has long been counted out in the Streaming Wars – has made a strong case for itself over the last two years. According to a recent industry study, Peacock ($0.42) ranks second in revenue per hour behind just linear TV ($0.57) and ahead of competitors WBD ($0.36), Hulu ($0.31), Disney+ ($0.28) and Netflix ($0.27). This is important because time spent with convergent TV (linear + streaming) is not growing as quickly as initially expected in the shadow of rapid cord-cutting. That puts the onus on revenue generation on creating a larger ROI per hour. Peacock may be small, with roughly 30M paying subscribers, and it may still be losing money ($825M last quarter). But it isn’t as leveraged as its rivals with global ambitions and there is a clear pathway to monetizing content if spending can stabilize.
One Fun Stat
•Of the 50 most in-demand films globally from January 1, 2020-April 3, 2024, just one is a Netflix original. Netflix reportedly wants Dan Lin to focus on quality over quantity moving forward, which is easier said than done.
Five Key Reports to Check Out
1.FAST Forward: How Regional Focus Could Change Sports Media
2.Paramount Eclipses WBD With Most In-Demand Licensed Titles on Netflix
3.A Booming Quarter for New Netflix Series Gave it a Leg Up Over Competition
4.British Content Has Seen a Resurgence in the Past Year – Can the BBS Capitalize On it With BritBox
5.Streaming’s Round Trip: How Netflix Went From Borrowing Content to Originals and Backs Again
