1. Origin of Audience Demand on Streaming –Below
is one of my favorite quarterly charts in Parrot Analytics history. Why? Because it provides the simplest snapshot of what kind of programming is driving US audience demand on streaming. This then clues us in on the relative strengths and weaknesses of these major streamers, which indicates how effective the macro and micro strategies at play really are. For example, as I’ve talked about ad nauseum, linear programming still drives significant
engagement on streaming. Six of the seven SVODs shown in the chart draw more than 50% of their US Q3 demand from broadcast and cable programming. That’s a massive portion of demand-generating programming that is at risk as linear TV continually retreats from scripted content. (This is a looming issue that no one in the industry seems to be talking about).
Elsewhere, Netflix and Amazon lead the pack in demand for international programming, underscoring their immense invest ents in non-English content over the years. Max is still overly reliant on linear programming from HBO and Discovery. Though WBD’s cost-cutting efforts may be necessary to service debt, there’s no doubt Max could benefit from a greater investment in originals.
Even as Peacock is only available in seven countries vs. Paramount+’s 45-plus markets, the former generates nearly triple the amount of demand for international content than the latter. Local language licensed programming is
particularly helpfulfor driving SVOD growth outside of the
US.
2. Hulu Breaks the Streaming Exclusive Movie Standstill – We have, in recent years, begun to see a small smattering of SVOD original TV series licensed to “rival” platforms. (Paramount+ and AMC+ have sent some of their in-house exclusives to Netflix for a time). But, to my knowledge, we have never seen an original streaming exclusive film licensed externally…until now. As another industry analyst recently pointed out to me, four Hulu original films – Vacation
Friends, Vacation Friends 2, Deep Water, Summer of Soul – popped up on Amazon Prime Video. I love this move for a few reasons. Firstly, according to Parrot Analytics data, SVOD exclusive films tend to generate the vast majority of value within the first 60 days of availability. After that, most films that don’t boast a seasonally recyclable appeal just sit there gathering digital dust. Next, syndication is how the entertainment used to work (and make oodles of money)! Creating more windows of monetization will generate more money. And lastly, by migrating to a larger platform, the upside is that these films will benefit from the increased exposure (though there’s also the risk they simply get buried in a more voluminous
library). WithNetflix shifting its narrative away from subscriber growth and towards revenue/profit and sitting on a mountain of SVOD exclusive films from the last five years, I wouldn’t be surprised if the company isn’t at least considering this tactic internally.
3. Streaming Keeps Cutting the Fat – Subscriber growth correlates strongly with demand for original content. However, the growth rate of global streaming originals is now down for the sixth time in seven quarters. This comes a full year after the Hollywood strikes, as companies across the board cut back on and take fewer risks with original programming. Netflix is still the dominant player here and its deep content pipeline continues to edge out the competition in terms of supply. In Q3 2024, 21.2% of all new streaming originals released were Netflix Originals – well ahead of 14.0% one year ago. The next closest competitor in global supply share for original series is Amazon Prime Video at 13.1%, followed by Disney+ at 9.6%. So, yes, the streaming industry is still obviously making new shows, but not nearly at the same clip as even two years ago. As volume declines, hit rate becomes all the more crucial to the success of a platform and the industry overall.
4.FAST Overhaul Part I – Different streaming platforms naturally
have different strengths and weaknesses. For example, in the wild world of
FAST, Paramount Global’s Pluto TV emphasizes linear-like FAST channels while Fox’s Tubi puts a focus on its on-demand library. This tends to make sense – Paramount Global has far more linear assets to leverage via channel-surfing interface while Tubi, which has invested in building a large licensed and original library, wants to offer more controlled choice. The former is built around lean back consumption while the latter is more lean forward. But to help make up the difference, Pluto TV produce management SVP Tad Ro recently revealed that the service “will continue to evolve its VOD experience, with themed content collections and ‘spotlights.’” This overhaul involves tweaks to the AI recommendation algorithm and the tech-backed UX/UI. Will this help grow engagement on the VOD side of Pluto TV? Will it disrupt Pluto TV’s strength in FAST channel viewing? How expensive are the tech tweaks? These are all important questions as the entire industry attempts to figure out a winning formula.
5. FAST Overhaul Part II – Let’s stick with FASTs for a moment:
Amazon recently announced that it is shutting down Freevee. (Freevee began as Freedive in 2019, then became IMDb TV, and then Freevee. Three names in five years for any product is NEVER a good sign). This move surprised absolutely no one who was paying attention after Prime Video introduced ads earlier this year. Freevee content will be integrated into Prime Video’s offering over the next several weeks, with the SVOD providing a sampling of free content moving forward in the hopes of converting users into paying subscribers. This will include select originals from Amazon MGM Studios, a variety of licensed movies and series, and a broad library of FAST channels. Keeping a swath of content free can help drive sampling and raise awareness for titles, though successfully upselling free users into paid subs is easier said
than done. Still, this removes clutter and confusion as Prime Video is now focused on selling ad inventory and Amazon’s Fire TV devices also offer content independent of Prime. Ideally, this frees up more money to be spent on turning Fire OS into a dominant player.
6. SVOD Growth Part I – For the first time in more recent memory, every single major SVOD that reports subscriber figures added new customers in Q3: Max (7.2M), Netflix (5.07M), Disney+ (4.8M), Paramount+ (3.5M), Peacock (3M), and Hulu (900,000). We can chalk a lot of this growth up to the expansion of less expensive ad-supported tiers, the wide distribution nets of strategic bundles, ongoing cord-cutting and, obviously, the desire for in-demand content.Importantly, Netflix, Disney, WBD and Paramount Global now all claim D2C profitability (accounting trickery notwithstanding) while Peacock is narrowing losses. This is crucial for the long-term health of the entertainment industry.
7. SVOD Growth Part II — Piggybacking off that last thought – every single SVOD that reports D2C revenue generated more than $1B in Q3: Netflix ($9.825B), Disney ($5.5.873B), Max ($3.63B), Paramount+ ($1.86B), Peacock ($1.5B). According to Parrot Analytics Streaming Metrics, Amazon Prime Video and Apple TV+ also crossed that threshold last quarter. Greater stability has arrived largely through tried and true TV strategies of the past: ad-supported, licensing/syndication, and bundling. As the floor of the industry rises, however, the greater the pressure will become to show growth. That will largely come down to a collection of content, distribution and UX/UI execution. The best idea might not always win if it isn’t accompanied by sound execution.
8. Podcast Power: Spotify vs YouTube – Sports aren’t the only arena for
heavyweight battles these days. The clash of media titans is a never-ending
source of entertainment and intrigue, particularly when one foe attempts to
elbow in on another’s turf. That’s exactly what’s set to play out between Spotify and YouTube as the music streamers attempts to carve out a foothold in the video podcast realm, which has long been dominated by Google’s favorite plaything. Spotify is developing a compensation model for creators who make popular videos alongside their podcast programming, ad free access to popular pods for premium subscribers and other perks designed to boost the visual element. This is a direct shot across the bow of YouTube’s ad-supported tier and its ad-free option YouTube Premium as well as its creator compensation model. One must also wonder that if Spotify musters any real challenge in the long-term, will it distract YouTube from its battle with traditional SVODs and enable close competitors such as Netflix to gain time spent market share.
One Fun Stat
•AccordingtoParrotAnalytics’ContentValuationmetrics,from2021-Present, Netflix’s Stranger Things leads all titles in historical revenue contribution with more than $900 million while Amazon’s The Boys leads all titles in lifetime subscribers added with more than 9 million.
Five Key Reports to Check Out
1.Parrot Perspective: How Netflix’s Ad-Tier Is Shaping Streaming’s Future
2.From Shonda Rhimes to Taylor Sheridan: 7 Hitmakers Shaping Hollywood’s Future
3.Streaming’s Next Big Bet: Global Content That Speaks to Zoomers
4.Prime Video and Apple TV+ are Getting Better at Monetizing Their Subscribers
5.How Licensed Content Is Netflix’s Secret Weapon Against Churn
