"Where Did Original Content Go?"... Streaming Services Struggle with Declining Viewership

Major U.S. streaming companies such as Netflix, Disney Plus (+), and Paramount have shown signs of slowing growth as they failed to release blockbuster hits like Squid Game earlier this year, resulting in declining viewership. During the COVID-19 pandemic, streaming services experienced a surge in popularity, but last year they faced challenges such as a global economic slowdown and subscriber losses. This appears to have been influenced by a reduction in investment in original content.

◆ Viewership and Viewing Time Decline... "Past Content Dominates the TOP 10 List"

[Image source=Reuters Yonhap News]

According to a report by Bloomberg on the 5th (local time), citing Nielsen data, the viewership ratings for Netflix original content during the first six weeks of this year decreased by 8% compared to the same period last year. February's ratings were the lowest since May of last year. May of last year marked the first time in 11 years that Netflix experienced a subscriber decline, raising concerns about the future of streaming. Current viewership has dropped to a level similar to that time.

As of the 5th of last month, the top 10 original contents from streaming services, including Netflix, had a weekly viewing time of 4.5 million minutes, marking the lowest in 15 months since December 19, 2021 (4.2 million minutes).

Bloomberg analyzed that as of February 5, most of the top 10 original contents from streaming services were previously released titles that re-entered the top 10. Representative examples include Netflix's New Amsterdam, Grey's Anatomy, The Walking Dead, and NCIS. While there were some year-end and early-year releases such as Disney Plus's Black Panther: Wakanda Forever and Netflix's You People, many were older productions.

Bloomberg explained, "If many of the top 10 contents are reruns, it means that new programs are not being released," adding, "Streaming companies are failing to produce new hits."

According to the report, Disney Plus and Hulu have not released new original content in the U.S. Netflix has released a few titles such as Ginny & Georgia. Amazon released Jack Ryan, which tells the story of a CIA agent, in December last year.

◆ Likely Impact of Reduced Investment in Original Content

[Image source=Reuters Yonhap News]

The reason streaming companies have not produced hits since the beginning of the year appears to be a decrease in investment in original content like Squid Game. According to foreign media, global research group Ampere Analysis predicted that the growth rate of spending on original content in the video media industry, which was 6% last year, would drop to the 2% range this year. This is the lowest level in the past decade, excluding periods affected by COVID-19 lockdowns.

Among this, spending related to content production by streaming companies is expected to grow from 25% last year to about 8% this year. Although this is relatively high compared to other video media, the growth rate is expected to slow significantly compared to before.

The reason streaming companies have stepped back from original content production is due to concerns about last year's economic recession and the resulting slowdown in industry growth. According to Bloomberg's data, the total number of new subscribers for Netflix, Disney Plus, and Paramount rapidly decreased from 105 million in 2020 to 79.1 million in 2021 and 61.9 million in 2022. In this trend, each company has declared plans to reduce investment in original content production as a cost-saving measure.

As major streaming companies reduce investment in original content production, the content production ecosystem is also being affected. Until just two years ago, acquisition deals for production companies were common, but it is reported that major U.S. production companies are now facing financial constraints and are unable to proceed with contracts during acquisition review stages.

Bloomberg reported that Tom Quinn, CEO of Neon, which distributed films like Parasite in North America, had agreed to sell the company to another film producer, Steven Rales, for over $100 million last year, but the deal fell through at the last minute. Bloomberg explained that spending cuts in the streaming industry, rising interest rates, and emerging strict regulatory issues have caused the market to freeze.