In the 1970s, the Federal Communication Commission’s (FCC) Financial Interest and Syndication Rules, known as the fin-syn rules, began re-shaping the television landscape in ways that are still seen today. Specifically, these rules helped spur the sale of programming from an in-house production studio to external networks, particularly as it pertained to syndicated series airing in subsequent windows after their initial runs.
This approach continues today with the various production companies of major media conglomerates creating and developing original TV series that are then sold and licensed externally. This function is a major revenue driver and lifeblood of competitive balance across the industry. But at a time when streaming growth is still imperative, the entertainment industry must balance strategic licensing with exclusive platform availability. That’s no easy task, especially given the fickle demands of Wall Street.
So to better understand title performance across platforms as well as how certain titles contribute value and generate ROIs, we’re going to compare the Streaming Economics production of titles across multiple potential homes. These learnings will help illuminate key factors in licensing, original development and financial feasibility.
Licensed Platform vs Home Platform
Yellowstone
Paramount Network’s Yellowstone is cable’s most-watched series and one of the most popular television shows in the world. But in January 2020, more than a year before the niche CBS All Access was relaunched as global general entertainment streamer Paramount+, the parent company licensed the hit show’s domestic streaming rights to rival Peacock. Whoops.
In that time, Yellowstone has been the seventh most in-demand TV show available on Peacock globally. In Q3 2024, the title ranked eighth in UCAN revenue contribution to Peacock and fourth in acquisition rate, according to Parrot Analytics’ Content Valuation system.
But how would it fare if it were available on its home base streaming service?
Had Yellowstone been available on Paramount+ in the US since 2020, it would be the fourth most in-demand TV title on the platform. More importantly, Parrot Analytics’ Audience Journeys analysis can assess how titles would perform on different platforms in driving subscriber acquisition and retention. If available on Paramount+ during the third quarter of 2024, Yellowstone would have been responsible for 2.94% of UCAN subscribers acquired to the platform. This would rank second only to Star Trek: Discovery’s 3.59%. It also would have ranked fifth in terms of UCAN revenue contribution. This would have been helpful as Paramount+ saw a notable jump in UCAN churn rate last quarter, according to Parrot Analytics’ Streaming Metrics.
This impressive hypothetical performance would largely be driven by the content consumption affinity between Yellowstone and creator Taylor Sheridan’s growing roster of spin-offs and related crime dramas that air on Paramount+. In other words, viewers who watch Yellowstone also watch Sheridan’s other series—such as 1883, 1923, Tulsa King and more — at a much higher frequency than other non-Sheridan series. As such, Yellowstone is a natural fit within the Paramount+ library. It’s unknown how much revenue the company is generating from its licensing deal with Peacock, but the upside of bringing Yellowstone in-house once the licensing agreement expires is significant
The Umbrella Academy
Netflix’s delightfully off-kilter superhero series hails from Universal Content Productions, a production company under the NBCUniversal banner. NBCU’s streaming platform is Peacock.
By Netflix’s own self-reported viewership figures over the years, The Umbrella Academy has been among its most successful originals since its 2019 debut. In that span, it is the streamer’s 17th most in-demand original series, an impressive feat given the company’s hundreds of originals. In Q3 2024, The Umbrella Academy ranked second among TV titles available on Netflix in total UCAN revenue contribution as well as acquisition (0.8%) and retention (1.1%) share.
But how would it fare if it were available on its home base streaming service?
If available on Peacock during the third quarter of 2024 (when its fourth and final season debuted), The Umbrella Academy would have ranked 5th in acquisition share, responsible for 2.1% of subscribers acquired, and 16th in retention, contributing to 0.49% subscribers retained. Crucially, The Umbrella Academy saw a 58% increase in US audience demand in Q2 in the month leading into Season 4’s release compared to the prior month. This surge of catch-up engagement likely would have benefitted Peacock as the service actually lost around 1 million UCAN subscribers in Q2 2024, per Parrot’s Streaming Metrics. Since debuting in 2019, it also would have ranked as the 11th most in-demand TV series available on Peacock overall.
In each instance, The Umbrella Academy is a success. However, since the show premiered long before Peacock existed, and given its success as a Netflix original, the rising seasonal licensing revenue fees NBCU collected was likely a valuable resource.
Ted Lasso
Ted Lasso is produced by Warner Bros. Television and has obviously become Apple TV+’s most successful original by far. Since Apple TV+ launched in November 2019, Ted Lasso is the most in-demand TV title available on the service. The feel good Emmy winner is a true anchor series for the streamer.
Yet in Q3 2024, more than a year after Ted Lasso’s third season, the title only ranked 26th in UCAN revenue contribution, acquisition and retention share (though it ranked as the fourth most in-demand title on Apple TV+). Still helpful, of course, but not as elite as previous quarters when new episodes aired.
How would it fare if it were available on its home base streaming service?
If available on Max during the third quarter of 2024, Ted Lasso would have ranked 9th in acquisition contribution (1.4%) and 20th in retention (0.27%). It also would have been the ninth most in-demand TV title globally available on Max last quarter.
Apple is reportedly looking to license its original films externally. Though the streamer is said not to be considering licensing original TV shows, this could open the door for at least discussing which titles would be highly valuable as free agents on the open markets. Given the long and lucrative history of syndication in the TV industry, and the recent licensing of streaming originals to Netflix by Paramount+ and AMC+, developing a baseline understanding of how to properly value in-house content is crucial. You never know when it may come in handy.
Varied Value Contribution
Arcane
Arcane, a visually resplendent and rhythmically pulsing animated series based on the League of Legends video game, is a bit of a different story. Developed by Riot Games for upwards of $250 million, Netflix reportedly licensed the series from the video company for $3 million an episode. With 18 episodes total across its two seasons, the streamer likely paid around $54 million for the show overall.
According to Parrot’s Content Valuation, in its first quarter of availability (Q4 2021), Arcane generated $53 million in UCAN revenue contribution alone. Across its first season globally, it generated a significant profit for the streamer overall. Even with a viewership ceiling for animation in the US, Arcane managed to derive most of its value from driving new subscriber sign-ups, specifically drawing viewers from sci-fi and animation clusters.
Netflix reported 8.3 million global net additions in Q4 2021, including 1.19M new customers in the UCAN market (its best mark in five quarters at that point). Netflix generated its best quarter of UCAN gross subscriber additions in a full fiscal year in Arcane’s debut quarter. Of course, one title is not solely responsible for that. But Arcane helped contribute to one of Netflix’s strongest quarterly content slates ever as Q4 2021 also included the bulk of Squid Game S1, new seasons of The Witcher, You, Emily in Paris, Cobra Kai, limited series Maid, and movies such as The Unforgivable and Don’t Look Up.
Arcane was also one of Netflix’s first split releases as it released in three batches of three episodes over three weeks, the same format used for its second season. This served as a trial balloon for varied distribution strategy that Netflix now deploys for most of its biggest releases that are returning for subsequent seasons. This approach has led to stronger retention rates overall as well an increase in Netflix’s preferred “views” metric.
Conclusion
The ever-evolving landscape of streaming content licensing highlights the delicate balance between maximizing revenue through external deals and cultivating subscriber loyalty with exclusive in-house content. The examples of Yellowstone, The Umbrella Academy, Ted Lasso, and Arcane underscore the nuanced strategies required to navigate this space. While licensing deals can provide immediate financial benefits and audience reach, bringing popular titles in-house can significantly enhance subscriber acquisition, retention, and long-term platform value.
The streaming industry's shift toward strategic content ownership and exclusive offerings is crucial, especially in an era where platform differentiation is key to staying competitive. As platforms continue to evaluate how best to monetize content, understanding the underlying value of each title—whether through licensing or original development—will be pivotal in determining success. The insights drawn from these case studies serve as a guide for future decision-making, encouraging a more data-driven approach to content strategy that aligns both with consumer preferences and financial objectives.
In this dynamic environment, the question is not just where to license content, but how to leverage it for maximum impact. The winners in the streaming wars will be those who can expertly navigate this complex balance and adapt to the rapidly changing demands of the global entertainment market.
