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Just over a decade after Netflix created the international SVOD market — with the launch of regional versions of its streaming platform, first in Canada, then worldwide — the battle over the future of global streaming has entered a new phase.
According to an Oct. 12 report from Wall Street firm MoffettNathanson, streaming’s penetration in America has hit the saturation point for “nearly every individual service” with the exception of Peacock and Paramount+. If platforms are going to find new customers, they are going to have to come from outside the States. London-based researchers Ampere Analysis noted in a recent report that Netflix commissioned 130 new international first-run shows and 62 features between April and September of this year. Over the same period, Amazon greenlit 92 new shows and 23 features; Disney+, 45 shows and four feature films.
“The overall trend we see is for global platforms leveraging the advantages the international, non-U.S. production and markets bring,” says Ampere executive director Guy Bisson. “It’s a trend that is here to stay and is developing rapidly and strongly.”
Testimony to that trend is the steady stream of new international series — see Netflix’s global hit Squid Game, which has been recommissioned for a second season, and Money Heist: Korea — Joint Economic Area, an Asian version of its Spanish-language hit; Apple TV+’s recently re-upped Brit spy series Slow Horses; or Amazon’s Indian and Italian installments of the Russo brothers’ upcoming global sci-fi event series Citadel.
But the new realities — higher production costs driven by the COVID pandemic and rising interest rates, and the internal pressure from falling share prices — mean platforms can no longer afford to simply spend their way to audience growth. This is clearest at Warner Bros. Discovery, owner of HBO Max and Discovery+, which is slashing expenses and shedding jobs top to bottom as CEO David Zaslav attempts to find some $3 billion in cost savings. That belt-tightening hit HBO Max’s international operations when the streamer announced it was shutting down original programming across the Nordics, the Netherlands, Central Europe and Turkey.
“The streamers haven’t stopped going for big-budget, prestigious international projects, but the projects with midsize budgets are disappearing,” says Ivar Kohn, CEO of Banijay Group-backed Rubicon, which produced two seasons of Norwegian time-travel drama Beforeigners for HBO Max. Kohn found out the show was being dumped by the service, and would be relicensed elsewhere, just hours before Warner Bros. Discovery announced the news of its pan-European cuts.
“It seems the focus is no longer about growth, but more about trying to keep the subscribers they have and try and earn more with them,” Kohn says.
The new cost-consciousness is also reflected in the move by several global streamers into unscripted and light-entertainment programming. This summer, Paramount+ launched four regionalized versions — from the U.S., Australia, the U.K. and Argentina — of its reality series The Challenge: War of the Worlds, a spinoff of its long-running MTV show, with the winner from each local show competing in a joint, 10-episode finale. Paramount kept costs low by producing all four international versions of War of the Worlds at the same location in Argentina.
An outlier in the international originals business is Apple, which still commissions very few non-U.S. programs. The company’s appointment in April of former Canal+ executive Georgetta Curavale to oversee French originals, however, suggests the streamer will be boosting its Gallic output in the near future.
Increased competition on the international streaming market has also forced platforms to become more selective about where they spend their money. Amazon has a strong focus on “a few very key markets which align with their strongest Amazon Prime retail markets,” particularly Germany, Japan and the U.K., says Bisson. The recent pullback by HBO Max will see the streamer putting its original investment primarily in three core territories outside the U.S.: the U.K., France and Germany.
Netflix, the only truly global producer, has commissioned new content from 44 territories since the start of 2020, but, says Bisson, its originals investment is shifting to less-mature markets with more growth potential.
“Increasingly it’s going to be Central Europe, the Middle East and some of the Asian markets where we’ll see the influx of international investment,” he says. “Those are the markets to watch going forward.”
One region where Netflix is still spending big, although it’s not yet a major territory in terms of subscriber numbers, is India. Best estimates put Netflix’s subscriber base on the subcontinent at around 6 million, compared to around 47 million for Disney+ Hotstar, which just signed a pricey deal for rights for Indian’s professional cricket league, an audience guarantor, and around 14 million for Amazon Prime, which invested early in original programming for the Indian market. “India is the one anomaly, because if you run the numbers, look at the size of the market there for Netflix, it shouldn’t be a focus for them,” says Bisson. “But they appear to be betting on the future potential there.”
As the global streaming wars heat up and competition increases, notes Ampere research manager Fred Black, international originals offer Netflix its best bet to stay ahead of its rivals. “A recommitment to an international [production] strategy allows the company to exploit one area where it still possesses an inherent advantage over studio-backed rivals,” says Black. “Disney+ or HBO Max may well make the next [hit U.S. original series], but are yet to show themselves capable of the next Money Heist or Squid Game.”
This story first appeared in the Oct. 19 issue of The Hollywood Reporter magazine. Click here to subscribe.
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