Deciphering Content Licensing in an Evolving Streaming Ecosystem

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The world of streaming filmed entertainment is experiencing a significant transformation. This evolution is marked by strategic transitions in content licensing, changes in audience metrics, and the emergence of new alliances among industry heavyweights such as Netflix, Disney, and Warner Bros.

Media executives, producers, and distributors find themselves in a complex environment where old strategies are being overturned, and innovative approaches are essential for staying ahead in a competitive and growing market.

The Rise of Licensed Content as Hollywood’s New Gold

Recent developments have marked a shift from the exclusive content era to a more open and dynamic approach to content licensing. As the demand for streaming content continues to surge, major players like Disney reembrace third-party licensing to maintain financial flexibility. This strategic pivot is about diversifying content and leveraging existing popular library titles as valuable assets in the coming age of austerity.

Disney has taken a notable step by agreeing to share streaming rights for ABC’s “Grey’s Anatomy” with Netflix again, despite the series being a long-time staple on Netflix’s platform. This move is part of a larger strategy where Disney is set to license 14 shows to Netflix. These shows span from classic favorites to recent hits, demonstrating Disney’s focus on leveraging its extensive content library to boost cash flow and enhance its streaming offerings.

Mirroring Disney’s strategy, Warner Bros. Discovery (WBD) has funneled more library content to Netflix. These shows include not just older HBO series content but also recent blockbuster films.

WBD’s recent subscriber losses highlight the intense competition in the streaming space. Their strategy shift from exclusive content to embracing third-party licensing reflects the industry’s recognition of the limitations of a walled-in approach. Warner’s situation underscores media companies’ need to adapt swiftly to changing market dynamics, balancing content exclusivity with broad distribution. WBD’s reversal is a response to the need for turning around negative cash flows, as the studio seeks to improve its financial standing.

Netflix’s Reembrace of Licensed Content

Netflix continues to leverage licensed content effectively. Its recent engagement report indicates that nearly half of its viewing time is spent on licensed content. This strategy not only helps Netflix to diversify its offerings and reduce production woes but also underlines the importance of licensed content in attracting and retaining viewers.

Despite the increased focus on licensing, Netflix will continue investing in original programming, but far less than in years past. For instance, in 2019, Netflix spent $15 billion on content, with 85% of new spending earmarked for originals, which was a high watermark. Likewise, over the last six years, originals have decreased from 60% to 40% of its streaming catalog.

As studios maneuver through the next era in streaming, there’s a growing understanding that licensing existing content can be more cost-effective than producing a flood of original content. This approach allows studios to maintain a diverse content portfolio while managing production costs more efficiently.

Uncover What Streamers Like Netflix Pay to License Third-Party Films and Shows Worldwide with Distribution Intelligence from FilmTake.

Worldwide Film & Television Distribution Intelligence

Get unparalleled access to market intelligence reports that draw on financial data and insights from dozens of content distribution deals worldwide between key industry participants.

Film and Series distribution rates and terms deriving from dozens of agreements for rights to transmit films and episodic television via PayTV and SVOD.

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Licensing Terms & Included Programs:

Pay-1 & SVOD Rate Cards for Motion Pictures and Series Exhibited Worldwide in Multiple Availability Windows

Motion Pictures: Pay-1, First Run, Second Window Features, Recent Library Features (Tiers AAA,A,B,C), Library Features (Tiers AAA,A,B,C), Current and Premium Made-For-TV Films and Direct-To-Video Films, covering many license periods over the last decade
Episodic TV: Current, Premium, Premium Catalog (1HR & 1/2HR), Catalog Series (1HR & 1/2HR), and Catalog Miniseries + Case Studies on Current Mega Hit, Catalog Mega Hit, and Premium Catalog, covering many licensing terms from 2012-2024
Because most-favored-nation rates operate in practice, the rates and terms apply to a diverse range of content and distributors worldwide in multiple availability windows.

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Audience Metrics: The New Gold Standard in Streaming

More nuanced audience engagement measures are replacing the reliance on traditional metrics like viewership numbers. Netflix’s latest engagement report reveals a detailed picture of how series like “Shadow and Bone” and “Wednesday” perform, taking into account unique viewers and completion rates. These insights are critical for media companies to understand what resonates with their audience, informing content renewal and acquisition strategies.

By offering more detailed viewership insights, Netflix addresses the demands of creators, advertisers, and investors for more accurate and accessible data.

Sony Pictures’ Strategic Licensing: A Case Study in Flexibility

Sony Pictures’ decision to forgo a direct-to-consumer streaming platform in favor of licensing agreements with Netflix and Disney is a prime example of strategic adaptability. This approach allows Sony to capitalize on its content without the financial risks of maintaining a streaming service. The success of this strategy could offer a blueprint for other smaller studios and distributors.

Starting last year, all films from the various Sony banners, including Columbia Pictures, Sony Pictures Classics, Screen Gems, and TriStar Pictures, will stream exclusively on Netflix in the United States after theatrical and home entertainment windows. Sony has decided to hold onto international streaming rights for a more piecemeal licensing approach.

The agreement also provides Netflix a first look at Sony’s original films produced for the direct-to-streaming market. However, Netflix can refuse any title, freeing Sony to pursue other streaming partners.

Major Content Licensing Deals in the U.S. (Updated)

Film Studio	Film Slate	Pay-One Window	Pay-Two Window, etc.
Disney	Disney	Disney+	N/A
Disney	20th Century Fox / Searchlight	Disney+ / Hulu / HBO / Max	N/A
A24	A24	HBO / Max / Cinemax	N/A
Neon	Neon	Hulu	N/A
Lionsgate	Lionsgate Films	Starz	N/A
Lionsgate	Summit	Starz	N/A
MGM	MGM	MGM+	Amazon / Paramount+
Paramount	Paramount	Paramount+	MGM+
Sony	Sony Pictures	Netflix	All Disney Platforms
Universal	Animated Films	Peacock / Netflix	Netflix
Universal	Live-Action Films	Peacock / Amazon	Starz
Warner Bros.	Warner Bros.	HBO / Max	N/A

FilmTake Away: Licensed Content as Hollywood’s New Bargaining Chip

As the industry continues to adapt to the demands of the streaming era, licensed titles are emerging as crucial bargaining chips, offering studios financial flexibility and strategic advantages. This trend is likely to persist, reshaping how content is valued and distributed in the increasingly competitive market.