The major media players are all largely faced with the same central issues at the moment: streaming is mostly unprofitable, the decline of pay-TV is urgently speeding up and Wall Street has run out of patience. Mediocre or worse earnings reports from several heavy hitters have sent share prices plunging over the last month (as of May 9) and a path towards profitable growth looks hazy at best.
Despite the similar challenges, each company boasts different strengths and weaknesses, likely resulting in an array of different strategies devised to combat this downward trend. In sports, there’s more than one way to build a championship team and, in the entertainment industry, the same applies. So by using data from Parrot Analytics, we can help identify how each major streamer is built at the top in terms of exclusive originals, fully owned library titles and externally licensed shows. This aids in determining where these companies might want to double down and where expansion is possible.
Originals are series that either debuted or air new episodes exclusively on the platform, such as Disney+’s The Mandalorian or Netflix’s Stranger Things. More often than not, these titles are owned in-house by the company that airs them, giving them full control over their deployment and monetization ability. However, that isn’t always the case such as with Netflix and You or Lucifer, both of which are produced by Warner Bros. TV and debuted on linear yet were rescued from cancellation by Netflix.
Non-original exclusives can be either older library titles that are owned by the same parent company, as is the case with Universal TV’s The Office airing exclusively on NBCUniversal’s Peacock, or exclusively licensed external titles, such as Peacock landing the domestic streaming rights for Paramount Network’s Yellowstone.
Non-original non-exclusive titles are shows that did not premiere on the respective streamers and now air across multiple platforms, such as Nickelodeon's SpongeBob SquarePants airing on sibling streamer Paramount+ as well as Amazon Prime Video (where it was the most in-demand show for the service last quarter).
When examining the top 25 most in-demand TV series across the major streamers in Q1 2023, a few key trends begin to emerge. For example, Paramount+ has added more than 20 million subscribers from April 2022-April 2023, yet the service sits right behind Amazon Prime Video for the most non-original non-exclusive series among its top 25 last quarter. How can we reconcile that?
From a strategic standpoint, this means Paramount Global has opted to collect valuable licensing revenue while still hosting key shows on its platform. In other words, the aforementioned SpongeBob, as well as hits such as NCIS, RuPaul’s Drag Race, Blue Bloods, Criminal Minds and more can contribute demand to Paramount+ while also generating money for Paramount Global as they simultaneously air on rival platforms. (Licensing revenue from the company’s TV Media and Filmed Entertainment divisions accounted for more than $1.3 billion last quarter). The company has deployed non-exclusivity, which can also be used to help promote the upcoming launch of an in-house original, such as when Paramount Global licensed iCarly to Netflix ahead of the Paramount+ revival.
Similarly, given Peacock’s leading 16 non-original exclusives among its Top 25, NBCU could consider becoming more of a content supplier thanks to its owned library of in-demand titles. Bravo originals might fit well on both Peacock and Warner Bros. Discovery’s Max, for example. Such a strategy would help to offset the significant losses accrued from investing in streaming.
Conversely, the majority of Disney+’s top 25 is comprised of originals and exclusives that only air on Disney+. Such a strategy can help drive subscription growth and increase the perceived value of the service in the minds of consumers. After all, the magic kingdom’s streamer does sit second only to Netflix in global subs (157.8 million). While CEO Bob Iger has said the company will consider reopening its external licensing business, there’s no doubt that Disney’s aggressive in-house consolidation helped the streamer rapidly reach scale.
Despite the vast differences in approach, Disney+ and Paramount+ are nearly even when examining total catalog demand – which takes into account both original and licensed films and TV series – in the US in Q1 2023. Though this is also due to library size, it also speaks to the value various strategies can yield.
This examination can also provide a snapshot of insight into larger strategic decisions. If we look at Hulu, the majority of its Top 25 most in-demand series last quarter are not owned in-house. This represents a potential future pain point as the respective content owners could eventually reclaim the rights to these series or sell them to a higher bidder (Hulu lost Seinfeld to Netflix in 2021 and Netflix recently lost New Girl to Peacock and Hulu. Streaming rights are like a game of musical chairs).
Hulu sits second in total catalog demand behind just Netflix, yet relies heavily on Japanese animation series and titles from CBS (Blue Bloods, Criminal Minds), Adult Swim (Rick and Morty) and Cartoon Network (Adventure Time), none of which are guaranteed to remain on the platform long-term. Such a position muddies the future of Hulu at Disney as the Mouse House must decide if it’s better to sell Hulu given its reliance on external programming or keep it as part of the valuable Disney bundle and a next-day air home for ABC and Fox series. Combing the two into a single service results in a dominant UCAN service, for now, in terms of total catalog demand.
In the 2010s, Netflix recognized the future inevitability of increased competition from many of its licensing partners, and began investing in original content to avoid massive gaps in its library when titles such as Friends and The Office were reclaimed. As a result, Netflix Originals accounted for more than 50% of its US library for the first time in August 2022. Unsurprisingly, the market-leading streamer is also second in originals among its top 25 most in-demand series last quarter with six.
Interestingly, the company may stand to benefit most from the re-opening of the Hollywood licensing market as companies look to generate more revenue by selling off content. However, Netflix must now contend with a host of competition when a splashy series is made available as opposed to the early 2010s when it was the only game in town.
Given Netflix’s dominant share of global audience demand for streaming originals and its increasing acceptance of linear strategies (ad-supported, spacing out releases, etc.), it could potentially consider licensing certain in-house titles to generate additional revenue as Amazon Prime Video is beginning to do.
Ultimately, every strategy has its pros and cons. In-house consolidation helps to spur subscription growth, but sacrifices multiple windows of monetization. Licensing too much content externally may increase revenues, but it can devalue the streaming service in the eyes of consumers in the process and leave the company struggling to increase market share. Surviving the streaming wars will require the right balance and mixture of several different strategies that keeps companies afloat financially but also still positions the respective streaming services as go-to destinations.
