The long-awaited recent return of the NFL has me thinking about the varied ways in which the same position on the football field can contribute value. For example, wide receivers all share the same goal of catching passes, moving the offense down the field, and ideally scoring touchdowns. And yet, wide receivers vary greatly in physical composition, capability, and strategic deployment.
The optimal offense typically includes a big-bodied game-breaking home run threat who can generate big plays and lines up out wide. Complementing him are shiftier pass-catchers with sure hands that line up in the slot and tend to catch shorter passes. Two players at the same position with the same overall goal contributing in totally different ways.
Oddly enough, streaming original libraries aren’t too dissimilar. All digital originals share the same goal of contributing to a popular streaming service that is acquiring new subscribers and retaining existing customers. Widely embraced original television series are the primary tools with which to do this. Yet is there a difference between new shows vs returning series when it comes to this mission? If so, what are the specific value contributions of each? How can companies optimize their content catalogs to build the best service and win the Super Bowl of streaming?
In this essay, we will explore the supply trends that are currently shaping the market and helping to dictate which titles penetrate the zeitgeist and which wallow on with a whimper. Only when we fully understand what’s happening with the volume of streaming originals during this new industry era can we then properly identify the different ways in which new and returning shows contribute value on an engagement and subscriber level.
How many shows are being made?
The supply side of television speaks volumes about the wide array of ways in which titles can solve for platform goals. After all, if every company is releasing hundreds of new shows every year, that says something about programming budgets, consumer attention, churn cycles, and more.
Of course, that isn’t the case. Even in the gravy days of low interest rates and streaming growth at all cost strategies, peak TV peaked in 2022 with 599 English language series airing across broadcast, cable and streaming in the US, per research from FX Networks. That number shrank to 516 in 2023 and is expected to decline once again in 2024.
This trend is reflected in the growth rate of global streaming original premieres. The quarterly rate has dropped from 11% in Q1 2020 to 3.9% in Q2 2024 with a decline beginning in early 2023 and accelerating later in the year due to a combination of companies cutting costs and the debilitating Hollywood labor stoppages. Streamers are still making new shows, just not at the same clip as they once were.
On a macro level, the entire industry is enduring a contraction as programming budgets stabilize or decline in recent years after years of annual increases. Efficient content spending and overall frugality are far more important now that Wall Street doesn’t value raw subscription growth as much as it once did. With linear TV revenue continuing to sink faster than the XFL ratings, money is tight for many legacy media players.
“Overall, the number of green lights is nowhere close to what it was in the Peak TV years of 2021 and 2022,” the LA Times recently reported.
As a result, the raw number of new Season 1 platform originals by premiere year have largely decreased or slowed since 2020. Netflix still leads the pack by a wide margin while HBO and Max, when counted together, have entered the same tier as Amazon. These services tend to release the greatest supply of new originals. As standalone services, Disney+, Hulu, HBO, Max, Apple TV+, Paramount+ and Peacock are far less voluminous. This is important because specific value can also be dependent on the prevalence and saturation of a given title and/or platform, which we’ll explore later.
Put another way, here are the average annual year-over-year changes in new Season 1 platform originals from 2020-Aug. 31, 2024 as the major streaming powers rein in spending:
- Max (-53%)
- Apple TV+ (-37%)
- Peacock (-33%)
- Netflix (-28%)
- Disney+ (-22%)
- Hulu (-17%)
- Amazon Prime Video (-7%)
- Paramount+ (+ 16%)
Even Paramount+’s average is misleading as it has seen annual year-over-year decreases in three straight years after a big jump in 2021. Crucially, this implies that returning original series (shows that are on Season 2 and beyond) are taking up a larger share of the pie. Streamers are more focused on delivering hits and then nurturing them for multiple seasons as opposed to funding a Jackson Pollock-esque scattershot approach to new originals. This is a sign of industry maturity as strategies begins to resemble market approaches of the pay-TV heyday. In the 1990s, 80% of new shows made it to a third season.
As the volume of new streaming originals declines overall, hit rate becomes far more important. Companies no longer have as many lottery tickets. This means there’s a smaller chance of a low-budget over-performer such as Baby Reindeer essentially serving as found money on the release slate much like an undrafted free agent becoming a major contributor a la Kurt Warner or Tony Romo. There’s also less opportunity for a break out tentpole hit such as Reacher, a Tom Brady sized hit for Amazon, to help subsidize the inevitable misses.
With the supply side trends as needed context, let’s now dig into the ways in which new and returning original series help prop up an SVOD service.
Content
New English and Non-English Netflix originals debuting their first seasons have far out-performed returning Netflix originals through the first half of 2024, according to the streamer’s self-reported global viewership data. But how does this trend hold up industry wide in recent years?
Here is the average annual percentage of top 20 most in-demand platform originals that are new releases (first seasons) from 2020-Aug. 31, 2024 by service:
- Apple TV+ (37%)
- Hulu (32%)
- HBO Max (31%)
- Disney+ (29%)
- Paramount+ (28%)
- Amazon (21%)
- Netflix (11%)
So, what have we learned so far?
First, the supply of new releases, or first season originals, is slowing. Second, these freshman originals then comprise a much smaller percentage of the top 20 most in-demand originals on each platform compared to returning original series. What’s more - new original’s share of the top 20 is largely decreasing over the last four years. In other words, returning hit original series are commanding more audience demand than new original hit series.
Okay, but how does viewership and engagement translate to subscriber growth?
Dahmer: Monster – The Jeffrey Dahmer Story was released on Netflix on September 21, 2022. Wednesday first premiered on the streamer in November of the same year. That means Q4 2022 was the primary beneficiary of these shows, which currently rank third and first, respectively, among Netflix’s self-reported most-watched English language series ever. According to Parrot Analytics’ Streaming Metrics, Netflix saw nearly 910,000 net additions of active consumers in the UCAN market in Q4 2022. This also netted out to just a 1.62% churn rate. (Streaming Metrics estimates the number of users who actively subscribe to watch content, which can exclude dormant users acquired via promotions and channel partnerships).
Stranger Things Season 4, Netflix’s second most-watched season of English language TV, was released in two batches across Q2-Q3 of that same year. In those quarters, however, the streamer lost subscribers in the US which was the catalyst behind Wall Street’s sudden doubt regarding streaming economics. Content can perform well and help drive growth, but it’s not always capable of over-correcting for macro market factors.
Unique trends could also be found when looking at UCAN platform subscriber growth and churn levels for the first two quarters of availability (when applicable), plus the in-season vs off-season US audience demand levels for every season of Bridgerton (Netflix), Ted Lasso (Apple TV+) and The Boys (Amazon Prime Video).
There are multiple factors beyond one title that contribute to quarterly subscriber growth/retention. It’s not all up to one title usually. But platforms that are highly saturated already like Netflix can benefit from the smaller yet more consistent subscriber growth multi-season returning hits like Bridgerton can help provide. Bridgerton Season 2 (which debuted March 25, 2022) wasn’t able to overcome Wall Street’s pessimism surrounding Netflix at the time as the service lost subscribers in back-to-back quarters to start the year despite the successful season. Yet in the show’s other two seasons, as well as Queen Charlotte: A Bridgerton Story, Netflix generate steady net customer additions in the first two quarters of availability.
For smaller services such as Apple TV+, returning hits like Ted Lasso can provide bigger subscriber boosts over subsequent seasons until the show reaches saturation. Over the show’s three seasons (so far), Apple TV+ added the most UCAN net additions in the first two quarters of Season 2’s availability compared to the first two quarters of Season 1 and 3. For each season, the second quarter of availability also saw an improvement in churn rate from the previous quarter. The weekly release of the immensely popular title helped sustain demand and lead to better retention. (Roy and Keely better get back together in Season 4).
For larger services like Amazon Prime Video that still haven’t quite hit saturation, new hits such as The Boys may be more front-loaded. Prime Video saw more net additions in the first two quarters of Season 1’s availability back in 2019 than the first two quarters of any subsequent season. Churn also largely declined in the second quarter of each season’s availability versus the first, though not always.
Interestingly, all three shows experienced the best decay rates — or the change in demand from in-season to off-season — in their first seasons. All three shows saw an increase in US audience demand from in-season (the period in which the show is releasing new episodes) to off-season (an equal amount of time following the finale) in Season 1, before seeing decreases in the same window changes throughout all subsequent seasons. That means first seasons of new hit shows can sustain audience interest more effectively for longer while subsequent seasons will likely elicit more front-loaded bursts of consumption before tailing off quicker.
Another trend that was consistent across all three shows was steadily increasing in-season US average demand that peaked with the most recent season of each one. These hit multi-season shows built and grew audiences over time after enjoying break out first seasons to begin with. This isn’t unheard of, but can be rare in an era in which most successful shows launch big before losing a percentage of its audience with each successive season.
Conclusion
The number of new streaming originals is decreasing due to factors like production shutdowns and budget constraints. With fewer streaming originals hitting the market, the success of those that do see the light of day becomes more vital to the success of a platform.
Popular series, both new and returning, help drive subscriber growth and retention. However, the impact a hit original series can have on subscriber growth and retention can vary depending on the size of the platform’s library and customer base. The value of a title can be influenced by its prevalence on a platform and the overall saturation of the service.
Hit new series can help elicit more sustained engagement across their first seasons regardless of streamer. They can also help grow market share for smaller services looking to add new customers. Successful multi-season returning series often have a more consistent impact on subscriber growth and retention over the long-term, though are at the mercy of overarching industry factors. Nurturing and investing in breakout originals has become key to maximizing their long-term value. This is why shows originally designed as limited series — such as Big Little Lies, Shogun, The White Lotus and others — have recently been extended for multi-season runs.
Just as great NFL offenses leverage the varied skills of all contributors on the field, streaming companies must understand the different ways in which original TV series can benefit the service. By understanding these trends and implementing effective strategies, streaming services can optimize their content catalogs and compete successfully in the market.
