Netflix Leapfrogs Legacy Studio In Key Metric For First Time [Parrot Analytics]

Friday, 18 October 2024, 5:26 pm
Press Release: Parrot Analytics

For the first time ever, Netflix now leads a legacy studio in Corporate Demand Share — that is, demand for all original TV content produced under a company’s corporate umbrella.

Netflix (9.6%) jumped ahead of NBCUniversal (9.0%) in Q3 2024 for fourth place in the category. This data assesses the long-term viability of media conglomerates and can help value a TV library. It also demonstrates lucrative long-term licensing potential, should Netflix ever tap into that revenue well.

In just 12 years since its first original Lilyhammer debuted, Netflix has built a more in-demand TV empire than NBCUniversal, whose original TV programming dates back to the 1940s. This milestone is a remarkable show of force for the streaming giant.

This comes as Netflix is about to stop revealing the very data that has helped skyrocket its share price over the past decade — subscriber numbers. Without these figures to analyze, Netflix must change what it publicly measures and communicates to Wall Street, and outside metrics will become more crucial than ever to assess the state of the entertainment industry.

Ad Tier and Sports

Without subscriber numbers, Netflix will need a new growth narrative to spin to Wall Street. That’s where the service’s growing ad-supported tier comes into play. The ad-tier, which is currently only available in 12 markets including the US, is an avenue to increasing revenue and profit over the long term while providing consumers with pricing flexibility.

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It’s a continued segue into the streamer’s more broad appeal era that dovetails nicely with the company’s increasing emphasis on live events. Q4 2024 will see Netflix’s biggest attempts yet at live sports with the Mike Tyson-Logan Paul fight, as well as two NFL Christmas Day games.

These are likely to be the most viewed live events in Netflix history. But the real question is: how many new subscribers who come for Patrick Mahomes and Lamar Jackson will stick around for Bridgerton and Love is Blind? The answer to that will power Netflix’s live events and sports strategy for years to come.

Streaming Metrics: UCAN Churn Trending Down

Per Parrot Analytics’ Streaming Metrics system — which will soon estimate Netflix subscriber numbers in the absence of the company’s disclosures — Netflix’s churn in UCAN ticked down in Q2 2024. By contrast, Max and Peacock’s churn rates increased during this time. Making progress here is crucial because this region has the world’s highest APRU and is the most saturated by major streaming offerings.

Netflix’s industry leading churn figures correlate strongly with the fact that it has the highest percentage of exclusive content on its platform among the major SVODs (not counting Apple TV+, which is almost entirely exclusive) — sitting at 87.3% earlier this year. While subscriber growth is not a zero sum game, Netflix retaining more of its subscriber base over time will help it further pull away from the struggling competition.

Streaming Originals Supply

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%.

Broadcast & International

Broadcast series — licensed from the very companies Netflix is competing with in Corporate Demand Share — continue to strongly over-perform on Netflix.

In Q3 2024, broadcast series such as ABC’s Grey’s Anatomy, NBC’s Seinfeld, and CBS’s NCIS accounted for just 1.0% of the TV shows available on Netflix’s US catalog, but drew 7.0% of the total demand. By contrast, international series on Netflix accounted for 61.7% of the US supply share and 27.8% of the demand share.

Netflix’s most successful international original will finally be back in December. Can Squid Game Season 2 live up to the original’s hype and exceptional audience demand while serving as a bridge to other non-English content sampling for viewers? The future of Netflix’s international content strategy may well depend on it.

‘Room for Improvement’ — Kids and Video Games

Netflix has struggled to carve out a significant piece of the kids entertainment and video game pies. While failure to secure these audiences today doesn’t harm the bottom line for now, it could be felt decades down the line. Winning over these audiences will be paramount to Netflix’s long term success deeper into the 21st Century.

Netflix Over NBCUniversal in Corporate Demand Share

Corporate demand share assesses the long-term viability of the top media companies as they look to consolidate their original content’s availability exclusively onto their own platforms, and can effectively help value a conglomerate’s legacy and library content in aggregate.
For the first time ever, Netflix has overtaken one of the legacy studios in this category, which accounts for demand for all original TV content produced under each company’s umbrella.
Netflix has steadily cut into NBCUniversal’s fourth place position of late, from trailing by -0.9% in Q1 2024, to -0.3% in Q2 2024, to now leading by 0.6% in Q3 2024.
In other words, there is more demand for Netflix’s original TV catalog — which started in 2012 — than that of NBCUniversal — whose original TV programming dates back to the 1940s.

Streaming Originals Growth Continues Downward Turn

Between the beginning of 2020 and Q3 2024, there has been a 299% increase in the global supply of streaming original titles as leading companies have prioritized DTC platforms and chased Netflix’s business model.
However, the rate of growth for streaming original titles has steadily slowed down in 2023 and 2024. This growth rate has now declined in six of the last seven quarters. In fact, Q2 (3.9%) and Q3 (3.5%) of 2024 have produced consecutive record low growth rates for global streaming original content.
Streamers are still making new shows, just not at the same clip as they used to. The current downturn was caused by a combination of both major companies shifting business models to more licensing, as well as cutting expensive and often low-returning original programming. Warner Bros. Discovery’s decision to shift Max Originals to become HBO linear originals also impacts these numbers.

Netflix Supply Share

Analyzing supply share is crucial for assessing a streamer's long-term viability. Netflix’s supply share of all streaming original premieres ticked down slightly in Q3 2024, but it remains the dominant player in this space.
As recently as Q3 2021, Netflix accounted for 30.2% of all new streaming original titles released globally. Fast forward to Q3 2023 and Netflix’s share of new streaming originals worldwide was down to 14.7%.
However, Netflix reversed this trend big time starting in Q4 2023, and has accounted for over 20% of all new streaming original releases in three of the past four quarters. This coincided with Netflix’s first increase in originals demand share since before 2020.
This was clearly the result of Netflix having a deep roster of new content in the can — something co-CEO Ted Sarandos emphasized repeatedly in 2023 — and a more global footprint than its competitors.

Parrot Analytics

Global television demand measurement

Parrot Analytics is the leading global content demand analytics company for the multi-platform TV business. With the world's largest TV audience demand datasets, the company currently tracks more than 1.5B daily expressions of demand in over 100 languages from 200+ countries to reveal the content consumers engage with and watch the most across platforms.

As a trusted partner to some of the biggest media companies and content creators in the world, Parrot Analytics optimises content workflows in real time. The company's TV analytics products result in better production, distribution, acquisition and marketing decisions, as well as accelerated SVOD platform success.