An industry transition from its golden era of unfettered growth to a more intricate chapter of market saturation was analyzed in depth by Ampere Analysis’ Guy Bisson on Tuesday, during the first day of the Göteborg Film Festival’s TV Drama Vision forum.
His drill-down, rich in detail and foresight, highlighted the strategic pivot to online advertising revenue which emerged as a growth linchpin, while the industry concurrently navigates geography, demography, and the creation of content that chimes with both. Six takes on the presentation:
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Rise of Advertising Revenue: the Shift from Subscription Models
The narrative of streaming, once a tale of exponential ascension, now confronts a reality of market saturation. The period between 2016 and 2020, a time of astronomic surge marked by a 466% growth in global streaming subscribers, has now given way to a more modest projection of 14% growth over the ensuing six years. This means a refocus on the lucrative realm of advertising. By 2028, advertising is poised to contribute a 20% slice of the $190 billion global streaming revenue pie, Bisson said, underscoring its instant significance in the market. This shift, heralding a 68% rise in streaming advertising revenue from 2023 to 2028, adds a vital 6 percentage points of growth, a feat unattainable by subscription models alone.
Market Realignment: Global and Demographic Changes
As streaming’s traditional strongholds level off, the industry’s gaze is squinting at untapped markets. This new course is mirrored in a global downturn in commissioning activity, with the U.S. market experiencing the most notable contraction. Netflix’s strategy is emblematic of this trend, displaying a decrease in new original content alongside an uptick in licensing endeavors. Overall, the industry anticipates a 3-4% annual increase in global acquisition spending, a marked contrast to the erstwhile robust growth rates of 41% for scripted and 22% for unscripted content in 2019.
Unscripted Content Boom: Cost-Effective and Versatile Choices
Streamers – where exclusivity once ruled – are now increasingly receptive to licensing and windowing third-party content. This evolution in content strategy is characterized by a slight uptick in licensing and a retreat from an original content production frenzy. In this landscape, Amazon distinguishes itself as the sole major streamer amplifying its original commissioning for first-run TV. Alongside this, unscripted content is witnessing a surge, propelled by its cost-effectiveness and versatility. The proportion of first-run TV series orders that are unscripted has leapt from 26% in late 2018 to 61% by the end of 2023.
This adaptation resonates with evolving audience predilections, with a clear tilt towards genres like crime, mystery and romance, and the notable upswing in unscripted.
Changing Viewing Habits
Viewing habits are at an inflection point, with streamed content on the cusp of eclipsing traditional TV viewership. This shift is palpable across all age brackets, exemplified by a 92% increase in daily streaming time for 18-24 year-olds since 2017, 162% for the 45-54 age group, and an astounding 317% for those aged 55-64. Each demographic, bar the 55-64 year-olds who average 2 hours and 47 minutes, surpasses the 3-hour daily viewing mark. This trend could be a critical juncture in the industry, signalling the next phase of evolution in TV formats.
The Quest for Profitability
The journey towards profitability has become a central quest for every studio-led streaming platform. Ampere Analysis’ projections indicate most will reach this milestone by the first quarter of 2025. Disney’s streaming division, for instance, is anticipated to generate $1.8 billion in EBIT operating profit by 2028, with Paramount+ and Pluto also expected to reach significant EBIT milestones by Q1 2025. This shift, spurred by investor pressures, is catalyzing a strategic realignment in content expenditure.
Global Content Investment: Focus on Emerging Markets
A global surge in content spend looms on the horizon, forecasted to swell by 44% from 2023 to 2028. This growth, however, is primarily driven by international markets, particularly in Central and South America at 19%, Asia Pacific 4%, and the MENA & SSA regions at 2 and 10% respectively. In contrast, established markets like Europe and the U.S. are poised for a stabilization or a decline in investment. This trend accentuates the shifting focus of streaming platforms towards novel audience segments and under developed markets.
The most significant shift in content orders is observed in Saudi Arabia, Nigeria, and South Africa, highlighting the geographical pivot in the industry. While total content expenditure globally is anticipated to grow, North America is projected to experience a noticeable decline, with forecasts suggesting a 21% decrease from 2022 to 2028. This comes amidst a backdrop of budgetary constraints; however, it’s noteworthy that despite these financial pressures, co-production has not yet seen a resurgence as a predominant business model for first-run TV content.
In sum, the Ampere Analysis presented by Bisson at Goteborg’s TV Drama Vision 2024 lays bare the ever-evolving playing field of the TV and streaming industry. These insights underscore the imperative of adaptability and strategic confidence to set the future course of content production and distribution.
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