The accelerated pressure put on SVOD streaming providers since the beginning of the year has led streamers to take unprecedented measures to preserve their revenues and profitability ratios, including a slowdown in titles production and acquisition, ad tier launches and ARPU preservation actions. As global growth continues to be threatened the strategic changes initiated should continue to affect content and distribution approaches of platforms.
While streamers have been filling their platform with large amounts of titles to create the most attractive offer and steadily refresh libraries for years, they are now looking into new ways to optimise their content investments while holding their costs in check. On which aspects of their libraries can they rely to stand out from competition and continue to attract and keep subscribers on their service?
A change in the industry’s long lasting paradigm towards the need for exclusive movies and series could shake up some services’ entire strategy. Defining the role of originals and exclusivities in platforms’ catalogues is one of the key aspects to explore.
Variety and quantity of content: the first assets of streaming libraries
In September 2023, Netflix still had the largest SVOD catalogue in most European countries, except for the UK and Ireland, where Amazon offered more choice to its users. On average, it provides about 8,000 to 9,000 films and TV show seasons in each country. Its closest rival is Amazon Prime Video, which offers between 1,000 titles in Eastern Europe and the Baltics and 10,000 titles in the UK and Ireland on its SVOD section. Disney+ has a smaller but still substantial catalogue of between 2,500 and 3,500 films and TV show seasons, depending on the country. Apple TV+, on the other hand, has the smallest library among major streamers with less than 300 titles across the region.
Netflix’s leading position in terms of library size matches the streamer’s long lasting dominance over the European market.
The volume of libraries can be even more important for some companies aiming to offer the widest range of services within their own ecosystem, and thus retain customers with an option for every need. This is the case for Amazon, which links its streaming service with its e-commerce business, Apple, which connects its streaming service with its devices, and Google, which ties its service with its data collation and advertising operations. For these actors, having an extensive library is crucial to retain users within their ecosystem and create synergies with their other services. This is especially clear when looking at the distribution access mix, including TVOD and EST titles. While Netflix and Disney+ only have SVOD titles in their libraries, while Amazon has up to 7 times more titles on TVOD or EST than on its SVOD offering. Apple TV can grant access to up to 200 times more titles on TVOD or EST than on its subscription offer.
The size of the content library is not the only factor that determines the success of a streaming service. In the UK for instance, Netflix is the market leader with nearly 16 million subscribers, despite having a smaller library than Amazon. Now TV and Disney+ have similar library sizes, but Now TV only has a third of Disney+'s subscribers. Apple TV+ ranks sixth in terms of subscribers, but its library is among the smallest in the market. For smaller services, the correlation between library size and subscriber numbers is even weaker, and the quality, editorial and content choices play a more important role in attracting and retaining customers.
In short, a critical size does need to be reached to aim at covering the evolving needs of a household or shared account, and justify a standalone subscription. However, within the plethora of titles available, only a handful of blockbusters really drive subscriptions and audiences. This is the search for these hits that has fed the inflation of content costs and the rise of superproductions. As described by Netflix CEO Ted Sarandos: "It's really not a chase for how many titles, but are these the titles you can't live without."
Originals driving the streamers’ added value
To drive demand and attract customers, platforms have therefore been betting on originals and exclusivities for years.
In September 2023, Apple TV+ is the streaming service that provides the most exclusivity. Its content strategy is singular in the market, as it offers a small library, almost entirely exclusive and global. The tech giant produces original series that are released across all territories, and rarely acquires external content. In September 2023, Apple TV+ had an exclusivity rate of almost 100% in all countries.
Netflix has a high level of exclusivity, reaching between 70% and 90% of original or exclusive titles across European countries on average. The service produces its own content, leveraging its global platform to understand users’ preferences and find audiences even for niche programs. Some of the most popular Netflix originals globally are Squid Game (265M views), Wednesday (252M views) or Lupin (100M views).
Disney+ has a lower level of exclusivity in September 2023. The service relies on its franchises (Disney, Pixar, Marvel, Lucasfilm, National Geographic) and long-lasting series to attract and retain customers. However, it has a limited range of content from other sources and genres. Its lower level of exclusivity can be explained by the strong foothold of Disney’s programs in partner platforms before the launch of the direct-to-consumer service.
Contrary to Disney+, Amazon Prime Video has been gathering content from several studios, such as Warner Bros., Paramount Pictures, Sony Pictures Entertainment, MGM or Universal Pictures. Across Europe, its SVOD exclusivity rate varies from 13% in the Netherlands to 80% in Romania. In the largest economies of the region, the rate reaches around 50% of the library. Amazon prime video has also invested huge budgets to produce appealing content, like for example its eight-episode Lord of The Rings season which cost an impressive $465 million.
The amount of OTT services in a country has an effect on the overall exclusivity rates. In the UK, where more services compete, rights holders have been licensing their content to multiple platforms. In the Romanian market, dominated by the large international services, assets are more proprietary to the networks and kept separate.
Streaming wars take a new turn as rivals could share more content
Exclusivity still plays a major role to attract customers to streaming platforms, when they are the unique place to find specific engaging TV series and films. However, the streaming industry is witnessing a shift in strategy as some of the major players could licence more of their exclusive content to competitors. Warner Bros. Discovery has been in talks with Netflix to licence some of its older HBO series, which were previously only available on HBO Max.
Similarly, Amazon Prime Video has secured deals with Warner Bros. Discovery and Sony to offer more premium titles to its subscribers in France.
A few years after pulling titles from other platforms when its direct-to-consumer service launched, Disney is also considering licensing more of its original films and television to streaming rivals.
These announcements indicate a change in the streaming landscape, and content owners are now willing to share their assets with other platforms instead of keeping them exclusive. The objective of such deals is to boost revenues from licensing fees and reach a wider audience. However, it also raises questions about the ability for streaming services to differentiate themselves from each other in the future, if they share large amounts of their libraries with competitors.
The rise of hybrid streaming models, which combine subscription and advertising, has also contributed to diminishing the premium aspect of platforms. Customers are no longer expecting to access a premium service. But they still expect to have a steady supply of new and appealing content to watch over time to maintain their subscription.
Libraries’ refreshment rates threatened to drop
Streaming platforms need to keep adding new titles to their catalogues to maintain their users entertained and prevent churn. Netflix, Amazon Prime Video, and Disney+, the market leaders in Germany, France, and the UK, have increased their SVOD library sizes by different rates between August and September 2023. Netflix added the most new titles, with a growth rate of 1.6% to 3.4% in the three countries. Amazon Prime Video and Disney+ proportionally added fewer new titles, with a growth rate of 1.1% to 1.7% in the same period.
Among the three streaming services, Amazon Prime Video has been the most stable in the last months, with refreshment rates standing at around 1% in the three countries. Disney+, on the other hand, has seen a slight decrease in its rate, which stood at the same level of Netflix earlier in the year, at around 2% in Western Europe.
Constasted levels of local investments
To cater to local audiences and drive their international expansion, global streamers have been increasing their investments outside of the USA. If the regulation is expected to play a role and force services to reach a minimal level of local content, wide differences are still notable between platforms in Europe. Besides, with lower objectives in terms of refreshment rates, local production projects might be affected.
Amazon Prime Video has the largest share of local content in its catalogue, providing 15% to 21% percent of local titles in the top five European countries. The service also announced increased local investments in France and the Nordics.
Netflix also invests in producing international content to appeal to both local and global audiences. Some of the most successful Netflix shows in Europe. Netflix also has a high level of localisation, with 4% to 13% percent of its titles coming from the distribution country.
Disney+ reaches similar levels, although with less films and series, with rates standing between 3% and 13%. However, the company announced in August 2023 a decrease expected in their investments in local programming.
Despite the continued investment planned, the pace has slowed and the pressure on profitability will continue to weigh on the entertainment industry. The difficulties faced to reach an agreement with Hollywood writers’ on rights and royalties also shows how streamers’ strategies are directed towards maximising the value of every asset. In this new era, the valorisation of content is crucial. This valorisation can take new forms and change the existing schemes of distribution, exclusivity, and premium aspect of subscriptions, as platforms no longer hesitate to offer hybrid ad and subscription services, or even licence content to FAST services. FAST services also demonstrated the potential for success of catalogue films and series, which can draw viewers even decades after their initial release. For the big streaming players, creating tailored, engaging experiences continues to be a battle given the vast number of programming options and personal preferences. But with the rationalisation of investments, the value of streaming platforms is shifting from inflating costs and libraries to this specific aspect, boosting their knowledge of their audiences, and being able to provide the most personalised experiences. Fully understanding the content strategy and titles library composition will be all the more crucial in the future.
This research highlight is based on our data coverage of OTT and Video in Europe. Interested in this topic? We recently launched a new module OTT video library analytics: contact us for more information. This topic will also be addressed during Nextv Series Europe, the event that focus on the trends, innovation and strategies driving Pay TV, Telecom and OTT in an increasingly connected ecosystem.