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The number of scripted TV shows nearly doubled between 2010 and 2015, jumping from 216 to 419, largely due to offerings from online services such as Netflix and Hulu and pay-TV companies, John Langraf, the CEO of FX Networks, told The New York Times.
Through the first seven months in 2016, there are already an estimated 322 scripted series in circulation, more than three-quarters of the total in 2015. By the end of 2016, FX Networks research predicts that number to reach up to 450, or a 7% increase year-over-year (YoY).
Consumption of original programming is likely to keep rising significantly, thanks in part to competition from SVOD services. Netflix said it plans to produce 600 hours of original programming in 2016, a big leap from the 320 hours it delivered in 2014.
While television continues to be a highly attractive industry for advertisers, bringing in over $66 billion in advertising revenue in 2015, viewing habits are shifting dramatically. This boom in scripted TV production poses a few major risks for legacy TV companies:
Digital scripted original series have skyrocketed, with more room to grow. Through the first seven months of 2016, online services have already produced 49 scripted series, an increase of 25 shows vs the same time period one year prior. Netflix alone has announced 71 scripted shows, which is more than the announced production from HBO, Showtime, Starz, and FX combined. Moreover, Netflix’s programming budget is twice the size of HBO’s, proving they have the money to continue to make high-quality content. On the other hand, broadcast and cable have one less scripted series YoY, indicating a slowdown in production.
Reach issues for TV networks. Due to the increased volume of shows from online services, and the overall cluttered pay-tv market, it is more challenging than ever for individual legacy networks to reach a substantial audience. In fact, among US adults, live TV viewing is down 7% from Q1 2014 to Q1 2016. As online services continue to increase their scripted series output, that number is sure to spike even more.
Monetization problems for legacy TV networks. The cost of creating television content continues to rise. In fact, the average cost of creating and marketing an hour of television today is between $4 to $5 million, up 20% in recent years according to FX research cited by Adweek. With increasing production costs and declining audiences, legacy companies are increasingly becoming squeezed to increase their profits.
Margaret Boland, research analyst for BI Intelligence, Business Insider's premium research service, has compiled a detailed report on subscription video on-demand services that examines how the growth of SVOD is coming at the expense of the pay-TV industry. The report analyzes the state of the pay-TV industry and maps out which demographics are more likely to stop buying traditional TV packages.
The report also discusses the user base, original content offerings, and subscription models of the major subscription streaming services available today, including Netflix, Hulu, and Amazon Video. Finally, it looks at how traditional pay-TV companies and premium channels like HBO and Showtime are addressing the shift to digital viewing, as well as the implications of their response for advertisers.
Here are some key takeaways from the report:
Those abandoning pay-TV packages fall into three main groups: cord-nevers, cord-cutters, and cord-shavers. Whereas video streaming services have found favor with younger viewers in particular, an increasing portion of older subscribers also are leaving behind their pay-TV packages. Still, younger viewers watch four times as much video content online than older viewers.
Netflix is the largest SVOD service and will continue to dominate the industry with an impressive original content lineup and aggressive expansion plans.
Amazon is trying to compete with Netflix by investing significant resources in original content.
Hulu is the third-largest SVOD service, but the only one to offer ad-supported membership tiers. Hulu has been the slowest to roll out original and exclusive content, but it has inked numerous deals in the past year to boost its content library.
Pay-TV companies are responding to the rise of SVOD services by offering subscribers "skinny bundles" and their own streaming services.
In full, the report:
Illustrates the fall of the traditional TV package and the rise of broadband only cable subscriptions.
Lays out the different types of viewers that are leaving behind pay-TV: cord-cutters, cord-shavers, and cord-nevers.
Examines the leading SVOD services including Netflix, Amazon Prime Video, Hulu, and premium channel offerings from HBO and Showtime.
Explains the various ways that pay-TV companies are responding to the rise of SVOD services, notably skinny bundles and standalone streaming services.
Considers what the migration to SVOD services means to marketers.
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