Netflix and Amazon now produce over half of their content internationally, an inflection point from traditional U.S.-centric production to a more diversified and growing global approach.
In an essential presentation as part of the Future Content Trends Report at Content Americas on Tuesday, Guy Bisson from Ampere Analysis showed the undulating shifts in the global TV and streaming industry and outlined the key drivers for change in 2024.
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The Decline in U.S. Commissioning and Production
A discernible downturn in U.S. commissioning and production activity has been evident since the latter half of 2022, predating notable industry disruptions such as the strikes. Full year comparison of the number of scripted shows produced for 2023 against the average of the previous two years shows a 38% decline. This trend stems from a combination of factors, including a retreat by streaming services from their previously aggressive content investment strategies. It will result in fewer shows coming through over the next 18 months. This pull-back correlates with the growing insistence from investors for profitability, shifting streamers’ business tactics.
Strikes and Economic Pressures Reshape Priorities
The impact of the Hollywood strikes was pronounced, with first-run TV experiencing a 46% decline and renewals down by 29% year-on-year. This highlights the strikes’ exacerbating effect on an already declining trend in content production, pushing the industry towards a self correcting and less bullish approach to commissioning new projects and renewing existing ones. Examples of this trend on the ground were shows such as “Shadow and Bone” penned by Oscar nominee Eric Heisserer (“Arrival,”) and Kim Cattrall starrer “Glamorous” both not seeing a renewal in 2023. Neil Patrick Harris “Uncoupled” also faced the chop despite solid completion rates, with viewing numbers seeming king.
Streamers Tighten Belts and Look Abroad
Reflecting a strategic diversification, there’s a marked shift towards international content production. Netflix and Amazon now generate over half of their content outside the U.S., underscoring a decreasing reliance on American production ecosystems. This global pivot is not merely a shift in geography but may signal a broadening of narrative scopes and audience engagement strategies.
Initiated by Netflix’s ‘Great Correction’ in 1Q 2022, streamers are unlikely to keep increasing investment at previously seen rates. It is still increasing though. Ampere Analysis forecasts Global investment change to grow upwards by 30% across 2023-2028; with Central and South America seeing increased investment along with Asia and MENA & SSA, whereas a leveling off and slight decline is expected in Europe and the U.S.
The current downturn in scripted production has not seen a compensatory rise in unscripted series orders, the picture painted by Guy Bisson showed. The stagnation of scripted highlights a complex content demand landscape that cannot be swiftly pivoted or addressed through simple genre substitutions, challenging previous assumptions about content fungibility in response to production constraints.
The Latin American Conundrum
The Latin American market remains a key region for investment with continued growth expected. The market, notably Mexico and Brazil, shows a relatively slower decline in production activities compared to the U.S., but challenges persist with the Latin American region as a whole experiencing a 30% decline in series orders in 2023 as compared to 2022. The region’s lesser impact from U.S. strikes and the existence of subsidy systems for local productions offer some resilience and Argentina, Mexico and Brazil remain in the Top 10 international markets in terms of series orders. Additionally, streamers are recalibrating their investments, with a noticeable pivot towards nascent markets like Nigeria, South Africa, and Saudi Arabia.
The Road Ahead: Diversification and Investment Shifts
The industry stands at a crossroads, with investment in North American content plateauing while regions such as Asia, the Middle East, and Sub-Saharan Africa are poised for the highest growth. This trifecta of Hollywood strikes, a streamlining of streaming costs, and a strategic realignment towards new regional priorities heralds an era of global diversification in content production, Bisson noted. For Latin America emerging genres such as children’s programming, reality TV, and romance content are becoming focal points of this strategy. 2022-2023 saw a 35% increase in children and family commissions and a massive 148% increase in reality. This is contrasted with a 21% decline in comedy and 26% in sci-fi and fantasy.
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