Industry insights: Live sports and advertising help take Netflix over 300 million subscribers, the amount of new content is declining, and DAZN sets a bold target of 1 billion users.
Live sports and advertising drive Netflix over 300 million
If you were going to write the script, this is how you would do it. In the very last quarter that Netflix plans to share subscribe data with the world, it managed to edge over the magic 300 million subscribers barrier. In reaching 302.5 million subs, it posted the single largest quarterly additions in the company’s history, adding a massive 19 million new viewers.
Even the lockdown-driven Q1 2020 figures don’t beat that, the initial pandemic wave ‘only’ contributing 15 million new users. Furthermore, the geographical distribution seems even as well this time round, with North America, Europe, Asia Pacific, and the Middle East and Africa region all contributing 4-5 million each.
Part of this is possibly down to the fact that there was a pronounced international element to Netflix’s most high-profile releases in the quarter. Squid Game 2 is from Korea, Senna from Brazil, Black Doves from the UK, The Empress from Germany, and so on. Netflix has deliberately pursued a strategy of international production, reasoning that not only is this popular in its own regions, but it spreads the risk and acts as a hedge against incidents such as the 2023 Hollywood Strikes.
The main drivers seem to have been both sports and the introduction of its ad tier. As far as ads go, Netflix has long acknowledged that its ad options have seen a slower uptake than it initially planned, but the company now says that 55% of sign-ups in ad markets now come from the ad tier. Membership on its ads plan grew nearly 30% quarter over quarter. It is leaning into this growth by adding an Extra Member with Ads offering in 10 of the 12 countries where it has an ads plan.
As for sport, it looks like its move into live sports has been a success despite the negative publicity surrounding the technical issues with the Logan Paul vs Mike Tyson boxing match in November. Ampere estimates that this event led to around 1.5 million sign ups in the US alone, and extrapolates data from other countries as well to suggest it contributed to 2m-3m signups in total.
It also reckons that 80% of the US signups were still there to watch the NFL Christmas Day matches just over a month later, the two most streamed NFL games in history.
So, where does the company go next? On ads, after successful trials of its in-house ad tech stack in Canada, it is planning to roll out its first party ad platform in the remaining ads countries in 2025, starting with the US in April.
As for the live events, it remains cautious. Despite securing the US rights for FIFA’s Women’s World Cup in 2027 and 2031, it seems the company will not be entering into bidding wars for mainstream sports rights. “We're not focusing on acquiring rights to large regular season sports packages; rather, our live strategy is all about delivering can’t-miss, special event programming,” it reassured investors.
What it likes is events that deliver additional content that attracts viewers and are not absolutely tied to the live outcome (or even just the additional content itself, such as Drive to Survive). Apparently, the Paul/Tyson bout did well on catch-up, which is something that its year-long WWE contract will do as well. Having tested the water with Beyoncé Bowl as part of the Christmas Day NFL matches, maybe its next target might be major music festivals and one-off gigs. Netflix live from Glastonbury anyone?
Why this matters: Netflix remains the big beast of streaming and where it leads, others follow. This means it is further opening up opportunities for FAST, AVOD, and other ad tier services from other companies, as well as making people more aware of streaming services as carriers of live events.
TV premieres of US content drop in 2024
One of the prime consequences of the WGA and SAG-AFTRA strikes in 2023 has been a significant impact on the volume of TV content produced in the US. The amount produced fell for the second row in succession, and last year was down 7% from its 2023 figure. This wasn't as bad as the drop from 2022 to 2023 though, which was 17% at the peak of the strikes, which is a sign that the decline might is slowing.
Not every part of the content slowdown can be laid at the door of the strike action, however. Unscripted TV production continued during the strikes, for example, but the format still saw an 8% YoY decline in premieres. This was not consistent across the board, dropping 9% on SVOD platforms, 8% on broadcast networks, and a massive 15% on cable, reflecting the contraction of cable in the US market.
By contrast, there was a much smaller 2% dip for scripted series across broadcast, cable and SVOD.
There were some quirks in the stats. For example, US broadcast TV output increased nearly 25% YoY from 2023, though this was mainly due to the strikes pushing season premieres from autumn 2023 to early 2024.
Some other data points:
- Netflix produces much more than the other seven major streaming platforms, but still showed a 22% decline in title premieres from 2022 to 2024
- Netflix had 7 of the Top 10 titles watched
- Franchises look to be weakening, with multiple properties underperforming compared to their pervious series
- In terms of genres, all streamers major on drama, followed by crime. All are weak compared to broadcasters on comedy. Disney is the only streamer to have made sci-fi a strength
- Fallout was Prime Video’s hit of the year, which is a bit of a surprise as it beat out the extremely expensive Rings of Power Season 2
- Watch out for Squid Game Season 2. It had similar viewership to the first two weeks of Fool Me Once, but its December 26 release meant it was too late to make the 2024 list
Why this matters: We are now firmly past the point of Peak TV. Content must now work harder to be commissioned and to be renewed.
DAZN wants to reach 1 billion global fans
Sports streaming specialist DAZN certainly reckons that live event streaming is the way to growth, with a bullish 2024 year-end statement that was built on revenue being up, viewership remaining robust, and the future looking bright after continued investments and new sports rights deals for the streamer.
The company now says it has 300 million regular viewers around the globe. This is different from subscribers, of course, and includes those watching free programming, but it’s certainly a good base and one that the company wants to build on.
“Our aim to reach one billion global users reflects the scale of our vision, and – as the only global direct-to-consumer sports platform – we are well-positioned to make this a reality,” said CEO, Shay Segev.
The company expects to pull in $6 billion in revenue this year, a figure which may or may not include an anticipated $1 billion investment from the Saudi Public Investment Fund, a deal which is currently on the verge of being closed.
It reckons it streamed more than 90,000 individual sporting events around the world in 2024, and is looking to add quality to the quantity with a deal to provide the new FIFA Club World Cup championship that starts in June for free.
Why this matters: While the 1 billion users target is an ambitious one, the fact that DAZN can even mention it shows the growing importance of sports to streaming and the fact that it’ snot just the marquee events that bring in the viewers. Niche sports, Tier 2 sports etc. are also important.