Is Domestic SVOD License Revenue Growth Maxed Out?6 Nov, 2013 By: Erik Gruenwedel
Time Warner said its 2013 revenue from subscription streaming services will be flat with 2012, while CBS says international revenue growth is booming
Has the domestic revenue growth for licensing content to subscription video-on-demand services plateaued?
Media companies such as CBS and Time Warner aren’t admitting as much, while at the same time acknowledging that revenue from international SVOD content licenses is poised to dwarf domestic.
Time Warner Nov. 6 said it has booked about $200 million in domestic SVOD license revenue through the first nine months of the year. It expects to equal the $350 million in revenue it did in 2012 by the end of the fourth quarter when SVOD fees from The CW fare come in. About half of the license revenue is from Netflix, followed by Amazon Prime Instant Video and Hulu Plus, according to CFO John Martin.
Yet, future SVOD revenue at Warner is primarily originating abroad as Netflix, LoveFilm Instant and other services rollout platforms.
“If you just think about the amounts booked to date, two-thirds of that is coming from outside of the U.S. It's disproportionately TV and Netflix only represents half of overall booked revenues. So there's a lot of players that are increasingly interested in the SVOD window, and we continue to see it as a real opportunity,” Martin said in the fiscal call.
Martin added that SVOD revenue represents 3% of Warner’s total film and TV revenue, and just 10% of its TV syndication revenue last year.
“We'll continue to look to how to optimize the control of these assets so that we can maximize their value going forward,” he said.
At CBS, which has aggressively sought to mine incremental revenue licensing shuttered TV shows to SVOD, upped the bar over the summer when it licensed summer replacement series, “Under the Dome,” exclusively to Amazon Prime. The SVOD service streamed episodes to subscribers four days after their initial broadcast.
In fact, CBS expects to generate $1.25 billion in international syndication revenue, which includes SVOD. That’s up from $400 million five years ago.
“You see the expansion of Netflix, in every foreign market they open up we are participating in that,” CEO Les Moonves said. “Even if the economy in Europe has gone down, the pricing floor for our programming has gone up.”
CBS CFO Joseph Ianniello said he expects SVOD revenue to greatly exceed 2012 levels, Netflix, Amazon and Hulu making up the lions share of the buyers.
“There are new [SVOD] entrants all the time and distributing content in different ways, Ianniello said. “Internationally is absolutely the fastest growing [SVOD] revenue, in terms of growth rates. There are hundreds of markets that still don’t have any of our content. And we still have a huge pipeline of content to sell.”