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TV Shows with Limited Streaming Exposure Do Increasingly Well for Pay TV Networks

Lauren Forristal

There’s an argument that TV networks such as Disney, NBCUniversal, Fox, WarnerMedia, Discovery, and AMC Networks missed a lot of opportunities when it came to decision-making in the early days of streaming.

Unlike Paramount which put its best show “Yellowstone” on competing streaming service Peacock — as well as released episodes five months after it had appeared on Paramount+ — other services like AMC+ and Hulu would stream network shows way too soon, including even before they air on linear channels.

This could be one of the reasons why the fourth season premiere episode of “Yellowstone” had 5.8 million audience members, according to Nielsen data provided by VIP+. The premiere was released on the Paramount Network exclusively and viewers could binge the earlier seasons on Peacock while they waited for the recent season to appear on the platform months later. Meaning that the only way for impatient viewers to see the show — other than watching it on cable — was to buy it through iTunes, further increasing revenue for Paramount.

The move worked as “Yellowstone” was the show the only cable drama in 2021 to see an audience increase for the finale episode. Thus, contributing to the hypothesis that limiting streaming exposure adds value for pay-TV.

While TV networks generate a significant amount of revenue regardless of streaming, with Disney earning total domestic TV revenue of $22.2 billion in 2021, the amount of spending towards streaming is costly. The transference of resources from TV to streaming, which includes original content, movies, and exclusive sports rights, the estimated direct-to-consumer spend among the big four media companies will likely see an increase of 118%, mushrooming from $18.4 billion in 2021 to $40.1 billion in 2025, according to Variety Intelligence Platform (VIP+).

In addition, when comparing TV and streaming income, Disney and NBC Universal suffered big losses, illustrating that because of these companies’ decisions, it will take several years for them to turn a profit.

According to Discovery CEO David Zaslav, some streaming revenues will ultimately match those from traditional TV. He proclaimed in the 2020 Discovery Investor Day that ARPU from discovery+ would exceed or equal that of linear in the short to midterm. That may be true, however, unless the bulk of the 81 million current TV subscribers to Discovery Inc. networks subscribes to discovery+ (along with HBO Max after merger), VIP+ thinks it is likely that it will make less total revenue overall.

While we can’t go back in time, it would have been interesting to see what would have happened if the TV networks all joined together (similar to what Hulu did in its early days) and windowed pay-TV content while also collaborating on high-profile originals. How different and successful would it be for the traditional media companies?

Alas, the TV networks are trying to make their streaming strategies work. Also, if the rumor comes true regarding Paramount and Comcast joining forces, both may dominate the space with “Yellowstone” and its combination of subscribers. We’ll have to see about WarnerMedia-Discovery as well.

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