The 80/20 View: The impact of original content on streaming

In his regular column for Mumbrella, Thinkerbell's general manager Ben Shepherd examines the trends and tides of Australia's TV on-demand audience.

When streaming first emerged in Australia, my initial forecast on how it would transform the Australian market was way off.

I can remember the moment very clearly. An investment firm had asked me for my perspective on both the linear TV market and the emergent streaming market. It was the end of 2014, Netflix was readying itself to launch in Australia and Nine and Fairfax at the time had committed to the StreamCo joint venture.

The view I held at the time, and presented to the room, was there was likely room for one streaming service in Australia, and it was more likely something that would steal from an existing market (Pay TV) rather than create an entirely new one. 

Yes, this view was spectacularly wrong. However – the streaming landscape in 2014 was very different to the one we see now. The difference – original content.

In 2014, Netflix had built its real scale via the use of catalog content. Content that had already aired. Netflix was picking this up for cents on the dollar and in the process building a large library of content that gave people a lot of depth. My argument at the time was that second run catalog content was a pretty lousy performer on linear TV… so why would that change on streaming? The second argument was that there’s a finite amount of interesting catalog content, and that wouldn’t be sufficient to fuel the success of three to five local operators.

To put it in perspective: Netflix had four original programs in 2012. Thirteen in 2013, and 25 in 2014.

In 2020 Netflix had close to 600 original productions.

But in Australia it’s not just Netflix. There’s Stan and Binge (for disclosure, Binge is a client of my employer Thinkerbell). There’s Amazon Prime Video. And Disney+. We have settled into a five player market and all players are serving up a large volume of new content.

The big question is how can advertiser-supported television compete against this tidal wave of content.

Let me explain. The streaming growth and retention engine has begun to follow a relatively stable pattern. They use new series as acquisition hooks – giving these services constant new news to push to market. This new programming also validates current subscribers decisions and aids retention, but it does the real heavy lifting in terms of bringing in new customers. As soon as interest dips in a new piece of programming, another one comes in and captures our collective attention. And another one. And another one. And before you know it over the course of a month there are 20-30 shows that become part of our cultural chatter.

Catalog content is the retention piece. It provides the depth. It allows the user to get lost in the sheer amount of programming available. It is a clear signal of the value these platforms provide – more content than you could ever want every month, for the price of two cups of coffee.

The best way to demonstrate this in action is via data.

What I’ve done is used Google Trends to capture search volume for key streaming content across either full year 2020, or the last 12 months to 5 March 2021.

Netflix – Google Trends of Selected Programming – Full Year 2020 (click to view larger)

Look at Netflix above. From March to December (with a slight break in May and June due to the heights of COVID restrictions) it has constant new news creating big hype in market. Every 2-3 weeks it is releasing a new title that is generating large levels of cultural buzz. This buzz converts into attention – both time (which takes away from other things, such as watching ad supported television) as well as buzz (which takes away from people thinking about, and talking about other forms of entertainment). ‘Tiger King’ was a huge buzzworthy moment in April, then there was ‘The Last Dance’, but ‘Umbrella Academy’, ‘Cobra Kai’, ‘Lucifer’, ‘Ratched’ and ‘Emily in Paris’ all were massive. Interestingly, ‘Bridgerton’ looks like being the most buzzworthy Netflix show ever in Australia – with search volume eclipsing ‘Tiger King’. 

Stan – Google Trends of Selected Programming – Full Year 2020 (click to view larger)

Stan demonstrates a similar trend – constant spikes throughout the year across its most notable programs. At least one or two high profile additions to the service every month across the year, combined with an expansion in catalog. And for Stan this doesn’t factor in the newly added Sport vertical (which will follow a similar approach). Stan’s programmers are landing big hits – ‘Normal People’, ‘Gangs of London’, ‘Yellowstone’ and ‘Comey Rule’ have been event-type television.

Disney+ – Google Trends of Selected Programming – Last 12 months (click to view larger)

Disney+ is less about volume and more about impact, but it has had numerous shows land and right now has a massive global hit in WandaVision which is dominating social media platforms. These new Disney portfolio programs are allowing Disney+ to continue to be in market, telling a new story about the depth of the product. It offers you all the Disney content you know, and it continues to build on this heritage with new programs.

Binge – Google Trends of Selected Programming – Last 12 months (click to view larger)

Binge was a bit later to the party than its competitors, but with The Undoing, The Flight Attendant and The Walking Dead it’s seeing strong traction. Again we see the same trend – new titles bring new customers, depth of catalog holds existing. Binge was impacted negatively by COVID as it slowed the amount of new programming on the service at launch. But as production ramps up, expect it to deliver constant ‘new news’ as well as see the benefits as global hits such as ‘Succession’ return.

In just the examples shown here, there are over 45 series that have made a big splash in the Australian market. Collectively across these services its likely they will introduce 800 new shows to Australians over the next 12 months.

My back of a napkin estimate for the same period for linear TV new or tentpole programming may be 3-5% of that number at a maximum. 

Which explains why TV top 20’s are generally filled with news, sport and legacy franchise programming across reality. And it also explains why linear TV is now less a 24 hour business and more of a 5pm-9pm one.

So how do you compete with these streaming services in 2021 as they release big shows at a clip of two or more a week, when networks are lucky to have two big shows per quarter when you exclude news and sport?

And can commercial television remain a $3.5 billion business off the back of news, sport and a handful of reality? Maybe it becomes a smaller, leaner business like the newspaper business has become?

If we look at the appointment of Mike Sneesby as CEO of Nine Entertainment Co, it’s clear the Nine board has had similar thoughts. It chose a candidate who knows the streaming business intimately. A leader who has built a business from the ground up in seven years in the face of immense global competition that will likely be worth more than the core TV business that funded its inception by the end of this financial year.

My view in 2014 was wrong – streaming was a bigger deal than I anticipated. My view in 2021 is a different one. And it’s that we haven’t even begun to see the transformative impact of streaming on linear TV and on the wider filmed entertainment world. And the data above is representative of how this will happen – more content, more options, more engagement and more attention of entertainment consumers going to these services. As engagement and attention are finite – these will come at the expense of the existing options.

And for those of us in media and advertising it will be must-watch content.

Ben Shepherd is the general manager of Thinkerbell. The 80/20 View is a regular column on Mumbrella.


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