A mix of legacy and tech Hollywood players reported earnings on October 31, as Wall Street considers who can compete with Netflix long term, and which success metrics will move the needle going forward. According to Parrot Analytics, the critical question remains in which success metrics will drive growth, and can anyone meaningfully challenge Netflix in the long run.
In the third quarter of 2024, Comcast’s NBCUniversal lost ground to Netflix in a key industry metric: corporate demand share, which measures total demand for all original TV content produced under a company’s brand umbrella. This marks the first time Netflix has surpassed a legacy studio in this category, underscoring the streaming giant's growing foothold as a go-to source for original content. NBCUniversal still ranks solidly compared to other legacy media companies such as Warner Bros. Discovery, weighed down by debt, and Paramount Global, which is currently undergoing an ownership transition.
NBCUniversal’s streaming service Peacock has had its share of success, particularly in Q3 with its coverage of the Paris Olympics. The question remains, however, whether this influx of new sign-ups will translate into long-term retention. Previous subscriber data hints at potential challenges. Following Peacock’s exclusive NFL Playoff Game in January 2024, the platform saw its highest churn rate in over three years. Parrot Analytics suggests that one-off events like sports broadcasts might drive initial sign-ups but do not necessarily guarantee sustained growth in subscribers. How Peacock performs post-Olympics in Q4 will be a crucial test for NBCUniversal’s subscription model.
TECH GIANTS UP THE ANTE WITH STRATEGIC ARPU INCREASES
Meanwhile, Amazon and Apple, both known for keeping their streaming metrics close to the chest, have made strides in monetizing their streaming platforms. While these tech giants do not report specific data on their streaming services, new insights from Parrot Analytics suggest that both Apple TV+ and Amazon Prime Video have seen notable improvements in average revenue per user (ARPU), driven by strategic pricing adjustments and the release of flagship series like "Ted Lasso" and "The Boys."
In recent quarters, Apple TV+ raised its subscription prices and introduced an ad-supported tier, helping drive up ARPU and revenue. Amazon Prime Video, following suit, added an opt-out ad tier, which has had a similar impact on its revenue growth.
Apple TV+ saw a remarkable 33% increase in quarterly revenue in North America by Q4 2023, attributed to a 43% price hike. Meanwhile, Amazon Prime Video recorded a 19.2% revenue increase at the start of 2024 after launching its ad-supported tier. Despite some short-term churn, both platforms benefited from pricing changes, better aligning their models with traditional subscription services while continuing to grow revenue.
LICENSING "YELLOWSTONE" PAYS OFF
One unexpected boost for Peacock has come from "Yellowstone," the popular Paramount Network series. Licensing "Yellowstone" to Peacock has driven nearly 4% of Peacock’s total subscriber acquisition in 2024. This is a noteworthy achievement, placing it second only to "Oppenheimer" among Peacock’s most popular titles.
"Yellowstone" has attracted 3.71% of Peacock's new subscribers in 2024, outperforming even some of Comcast’s prized intellectual properties, including "Saturday Night Live" and "Brooklyn Nine-Nine." Parrot Analytics data indicates that a significant portion of "Yellowstone" fans migrated from other platforms like Max and Netflix, with 18% of viewers coming from each of those services and 15% from Hulu.
NETFLIX'S DEMAND SHARE TRIUMPH
Netflix’s recent rise to the top of corporate demand share — surpassing NBCUniversal for the first time — serves as a strong indicator of shifting viewer loyalties. Corporate demand share, a metric assessing demand for a conglomerate’s entire original content library, underscores Netflix’s growing ability to compete with legacy media.
Parrot Analytics data shows Netflix’s demand share for original content has steadily climbed, closing the gap with NBCUniversal from -0.9% in Q1 2024 to -0.3% in Q2, finally surpassing it by 0.6% in Q3. This trend is notable, as Netflix’s original programming library started in 2012, compared to NBCUniversal’s original content catalog, which dates back to the 1940s.
Looking ahead, traditional and tech players alike must grapple with the realities of a competitive streaming environment where content exclusivity, strategic price adjustments, and savvy partnerships are paramount. As legacy media and Silicon Valley continue to refine their strategies, the winners will likely be those who effectively balance subscriber retention, ARPU, and content quality.
In an industry landscape increasingly defined by streaming revenue rather than linear TV, these evolving metrics will serve as crucial benchmarks. The numbers indicate a notable advantage for Netflix and the tech giants, but with new innovations on the horizon and shifting audience loyalties, the competition is anything but over.