Why streamers are shrinking their content libraries

With each passing day, the streaming landscape looks more and more like the beast it set out to kill – cable television.

Discussions over platform packages are looming as major streamers push ahead with ad-supported plans, limit password sharing and focus on live sports broadcasts. The goal of exponential subscriber growth fueled by pandemic lockdowns has shifted. Wall Street wants profits.

The key may be depth, not breadth.

Over the past year, many streaming services have begun shrinking their once-robust content libraries in order to pay lower licensing fees. (Streamers have to pay to license their own film and TV shows themselves, such as when NBC spent over $500 million to buy back the rights to “The Office,” an NBC show, in 2019.)

Faced with pressure to make profits and growing competition for viewers, streamers have turned to removing content to avoid residual payments and royalties. This dynamic has split the major streaming companies into two camps: buyers and sellers.

On the one hand is Netflix, Amazon And Apple – Companies that agnostically license content from other studios to expand their streaming libraries. And then there’s Disney, Universal, Warner Bros. Discovery And Of highest importancewho rely on decades of outdated content when building their own services and generate capital by auctioning it off to the highest bidder.

“The brands that are acquiring these titles are thinking about how they can be more cost-effective by not creating things but buying licenses,” said Stephanie Fried, chief marketing officer at Fandom, the world’s largest platform for entertainment fans.

Sellers receive cash while buyers receive content that stands out for its reliability and consumer value. This is particularly important for Netflix, which is a newer entrant in Hollywood and therefore has fewer long-running, addictive series. Just look at how NBC’s “Suits” did on the service last year.

What’s notable is that Netflix is ​​already profitable. Amazon and Apple have said they view streaming as a supplement to their overall business rather than as a core business. The rest of the major streaming providers are still working on profitability.

Naturally, narrowing content libraries requires differentiation.

The initial bloom of new platforms over the last 15 years meant that most new entrants took an “everything to everyone” approach, trying to become the only streaming service you needed. This meant that, aside from the user interface, most streaming services became more and more similar over time.

Fried said this lack of distinction could ultimately be negative as the landscape becomes increasingly sparse. She suggested streamers look at the type of content their subscribers consume and purchase complementary shows and films that have not yet been licensed.

This model has worked well for smaller streaming services such as BritBox, which offers a wide selection of British dramas, crime and period pieces; and Shudder, which focuses on the horror genre.

Netflix, for example, which has found success with nostalgic sitcoms like “Friends” and “The Office,” could launch similar shows like Nickelodeon and Paramount’s “Fairly Odd Parents” and “Hey Arnold,” Disney’s “Boy Meets World” and “According to.” Fandom featured the series “American Dad” as well as NBC’s own series “Saved by the Bell.”

Fandom, which hosts more than 50 million entertainment wiki pages across television, film, games, comics and more, has a “really good sense of the overlap between all of these walled gardens,” Fried said.

Original shows on Apple TV+ like Severance, Defending Jacob, Home Before Dark and Servant have delighted and frightened viewers. This type of gritty investigative thriller, focused on a character-driven narrative, would fit well with films like Warner Bros. Discovery’s The Leftovers, Netflix’s The Haunting of Hill House and Disney’s own early seasons of Twin Peaks said Fried.

On Amazon Prime Video, subscribers have chosen action-packed shows like “The Boys,” “Jack Ryan,” “Reacher” and “Invincible,” as well as high fantasy series “The Rings of Power” and “Wheel of Time.” ” Fandom’s data suggests that shows like Netflix’s “Jupiter’s Legacy,” Warner Bros. Discovery’s “My Adventures with Superman,” Paramount’s “Mayor of Kingstown” and Disney’s “The Americans” still have the streamer’s audience would be more captivating.

Likewise, Fandom data could give streamers insight into what types of shows they should invest in if they want to develop a new product.

At Disney+, family entertainment comes first. Fried pointed out that the best way for Disney to differentiate itself from the competition is to continue to expand its leadership in kid and family-friendly content. Disney-owned Hulu, meanwhile, is finding success with 30-minute feel-good sitcoms and prestige dramas, Fandom data shows. According to Fandom, NBC’s “Parks and Recreation” and the ’90s version of “Fresh Prince of Bel-Air,” alongside Paramount’s “The Nanny,” could serve Hulu audiences well, as could “Queen’s Gambit” and “Black Mirror.” from Netflix and the BBC show Orphan Black.

Universal’s Peacock is all about crime and medical dramas, and Paramount+ lets viewers get their sci-fi fix. At Warner Bros.’ Max, high-quality prestige shows have long been HBO’s bread and butter, and high fantasy entrants like “Game of Thrones” and “The Last of Us” have attracted younger audiences.

Doing well and doubling down in certain segments means keeping viewers longer, Fried said: “When they think about cutting your service, they say, ‘I can’t do that because they’re all my X-type shows.’ have.”

Disclosure: Peacock is the streaming service of NBCUniversal, the parent company of CNBC.

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