Image: Minions: The Rise of Gru, Illumination
1. Gen Z Phone Home – As I’ve gotten older, I’ve realized that every single generation is pre-disposed to dislike subsequent generations that follow. We all become the “olds” yelling at clouds at some point. Arguably nowhere is this more prevalent than in Hollywood, where it’s become incredibly popular to blame younger generations for the perceived decline in traditional entertainment. To be fair, there’s no doubt that YouTube, TikTok, Instagram and other social content has eroded interest in standard entertainment. Yet younger demos still contribute when properly enticed. Looking at the audience demographics of the ten most in-demand TV series worldwide (excluding Japanese and kids animation) year-to-date, nine over-index with the Gen Z/Millennial generations.
Given the ongoing transition to streaming, younger consumers are increasingly relevant to the direct-to-consumer equation. This is backed up by external industry research that finds Gen Z is most likely to pre-order tickets for a film’s opening weekend while TV and Film combined still account for more than a quarter of the 13-24 age range’s screen time.
Yes, gaming, social and user generated content is grabbing an increasing share of attention from young audiences. Mobile is also largely the first touch point in the media journeys for these viewers. But incorporating and leveraging these elements into traditional fare, while also appealing to the core Gen Z preferences, can still garner significant interest among generally apathetic audiences. Don’t quit on Gen Z!
2. What is Episodic Value? – Following the cancellation of Disney+’s lowly rated, highly expensive and divisive Star Wars series The Acolyte, there’s been a renewed discussion about the potential and pitfalls of eight-episode streaming seasons. Some argue the truncated episode counts limit creative quality while others contend it frees storytellers from required bloat. Some forget that broadcast seasons consisting of 20-plus episodes only arose due to advertiser mandates in the mid 20th century, rooting their origins in capitalistic objectives. Longer seasons were also more economically feasible when there were multiple syndication windows to help monetize the content and generate an ROI. Then again, large series libraries for linear hits have contributed immense value to streaming platforms as consistent retention drivers. Like all things in life, there are pros and cons. Strategy ultimately depends on clear objectives, which vary from company to company. Is it more valuable in streaming to hook viewers with one 22-episode series or five eight-episode shows? I lean toward the latter.
3. More Insight Into Nebulous Gen Z Tastes– According to Parrot Analytics’ Audience Solutions, Gen Z makes up approximately 27% of the global audience for TV and movies, more than any other generational group. On the small screen, animation holds significant appeal to the young demographic while some franchise mainstays have grown stale in the eyes of these tastemakers. This is somewhat similar to Gen Z’s taste on the big screens,
where animated franchises such as Despicable Me, Inside Out, Shrek and more tend to over-index. Romantic dramas (It Ends With Us, Challengers) are also drawing significant attention within this demo. Major franchises such as more recent Marvel films outside of Deadpool & Wolverine and DC flicks like The Batman have not garnered as much support from Gen Z as one might assume. As this generation continues to grow in influence, understanding their viewing habits will be crucial for the entertainment industry. By leveraging demand data and audience demographics, companies can better tailor their content to meet the interests of Gen Z.
4.NCTC’s Skinny Bundle – The National Cable Television Cooperative, which represents more than 900 smaller cable operators in the US, is preparing a skinny bundle for its customers that will be priced around $20 per month. At a time when the courts have temporarily blocked the sports-centric skinny bundle Venu (Disney, WBD, Fox), any sort of grouping like this becomes even more interesting. Broadcast TV remains a reliable, if shrinking, element of linear TV with spots leagues clawing over one another to capture primetime real estate on America’s Big Five (ABC, NBC, CBS, Fox, The CW). Local news,
which is slowly migrating to FASTs, as well as national/global news remains a
key attraction point as well. This new linear bundle enables customers to hyper focus on the programming that is most important to them (and remember, older viewers still love linear!) and create a stickier MVPD subscription. The importance of this is twofold: A) it’s a counter punch by linear to stave off obsolescence for a little while longer and B) a potential first step in bundling broadband, video, and select streaming offers (likely FAST) in a single ecosystem. That won’t be easy to pull off, but it would directly address consumer pain points and likely provide some impressive pricing power.
5. Netflix Needs IP – This past quarter, Netflix ranked first in the following categories (deep breath): total worldwide subscribers, net worldwide subscriber additions, quarterly revenue, US original demand share and US on-platform demand share. That’s impressive. However, the market leading
streaming service ranked just fifth in US corporate demand share, which
assesses entire libraries across the entertainment ecosystem. Netflix’s middling rank is largely due to its inexperience as an original programmer; the
industry forgets that Netflix has only been making its own content for 12
years. That hardly compares to the century of storytelling Disney and Paramount have under their belts. As such, it’s no surprise that Netflix has been desperately attempting to acquire and adapt popular IP with pre-established fan bases while pushing to create its own franchises. That approach is sound on paper, though inconsistent in execution. As a result, Netflix has expanded the scope of its quest for notable IP to include sports. Yes, this strategic expansion is largely driven by a desire to supercharge the ad-supported tier. But it’s also because Netflix knows sports can elicit recurring interest and engagement, which creates habitual viewing patterns much like franchise IP with multiple entries does. (Though sports offers little to no rewatchability).
6. Paramount+’s Hamster Wheel – Another day, another sneaky Paramount+ subscription effort. For a limited time, the service’s annual plan will cost just $29.99 per year, or roughly $2.50 a month. Take a guess when consumers are most likely to cancel an annual plan? Right after signing up! So they lock in a guaranteed year at a reduced rate but often don’t stay subscribed outside of that window. Discounted annual plans like this help with short-term monthly churn but sacrifice ARPU to do it (streamers don’t generally profit from a sub until after 6-8 months anyway) and offers little longer-term retention. This is also whyI’m glad Wall Street has moved away from raw subscriber growth. It’s misleading to say the least.
7. Streaming Movie Volume Hierarchy – Over the last four quarters, the US SVOD services with the largest collection of movies are Amazon (27%), Netflix (8%), Peacock (7%), Sun Nxt (5%) and Max (5%), according to Parrot Analytics’ Content Panorama. In that same time span, the five largest movie suppliers among AVOD services are Tubi (29%), Plex (13%), The Roku Channel (12%), Freevee (9%) and VUDU Free (8%). Interestingly, the top five genres of film in terms of volume across both types of platforms are Drama, Comedy, Documentary, Thriller and Action. Yet on AVOD, 82% of the films are 5+ years old, 10% are 3-5 years old and 7% are 1-3 years old. On SVOD, those numbers skew slightly younger: 5+ years (80%), 3-5 years (10%), 1-3 years (8%). SVOD and AVOD/FAST often circulate the same types of content, but slightly varied ages which also speaks to the core demographic of each.
8. Higher Ceiling > Higher Floor – The early portion of the streaming era was seemingly great for talent as buying out the backend of their deals resulted in more upfront money. It also had the added benefit of treating each original like a modest hit, which meant a greater variety of talent were seeing more upfront money and not just the super stars. But talent soon realized that a higher floor wouldn’t make up for a lowered ceiling and the chance to make beaucoup bucks on a true blue smash hit while streaming services realized that aligning incentives with the talent and sharing in the risk may be a better model in certain instances. The divide, however, was a leading cause of the dual Hollywood labor strikes last year and that delta appears to have leapt overseas. Directors UK, which represents British filmmakers, have written to Netflix, Amazon, Disney, Paramount, Apple and WBD in recent weeks seeking greater royalties for its 8,000-plus members, Deadline reports. If negotiations don’t get underway soon, the governing body could “withhold its members copyright from the streamers in the future.” Let the games begin all over again.
One Fun Stat
•Nearly 71% of Hulu’s US TV catalog demand is derived from shows that originally aired across broadcast and cable.
Five Key Reports to Check Out
1.The Changing Logic of Making Hollywood’s Next Blockbuster Franchise.
2.Streaming’s Resource Crisis: Is Content the New Oil?
3.The Streaming Paradox: How Netflix Thrives on Its Competitor’s Content
4.Which Paramount Brands Are Delivering For Its Streaming Business?
5. As Superman and Batman Enter the Public Domain, Hollywood Faces Opportunities and Risks
