“Suits” was the most-streamed title of 2023 — a sign that licensed content is here to stay.
According to third-party rating service Nielsen, the USA Network series was viewed for nearly 58 billion minutes last year after it spent 12 consecutive weeks at the top of Nielsen’s viewership charts.
Netflix (NFLX) acquired the drama in July. It’s also available to stream on Comcast’s Peacock (CMCSA).
The report added that “Suits,” which originally aired from 2011 to 2019, surpassed “The Office” to become the most-streamed title ever. “The Office” generated 57.1 billion viewing minutes in 2020.
Other top licensed shows included “Bluey,” “NCIS,” “Grey’s Anatomy,” “Cocomelon,” and “The Big Bang Theory.” Apple TV+’s “Ted Lasso” (AAPL) was the top original series after racking up nearly 17 billion hours viewed.
The resurgence of licensed content seems to have brought the streaming wars full circle after companies spent billions to create original IP in a bid to edge out competitors and attract subscribers.
As content budgets shrink across the board, licensed content can also keep viewers engaged between new seasons of original series.
Although Netflix has certainly led that charge — the company recently revealed 45% of all viewing on Netflix stemmed from licensed titles from January to June 2023 — it’s actively shut down licensing out its own content.
“What’s interesting is a show like ‘Suits,’ which has been played on USA for a long time, has been available on Peacock and had been available on Amazon for a couple of years before it hit Netflix, and yet we were able to unlock this enormous, enormous global audience for it,” Netflix co-CEO Ted Sarandos said on a call with reporters late last year.
“That’s the combination of our large subscriber base and our recommendation system that knew to put ‘Suits’ in front of people who were going love it the most,” he continued. “I do not think that that necessarily would happen in reverse. I do think that we can add tremendous value when we license content. I’m not positive that that’s reciprocal.”
Sarandos reiterated that thinking during the company’s earnings call last week, saying the streamer is “open for business” when it comes to licensing content from competitors.
“I am thrilled that the studios are more open to licensing again,” he said.
Disney (DIS) has been one competitor embracing the change.
ABC’s “Grey’s Anatomy” has been highly successful on Netflix while Disney acquired the international broadcasting rights to “Bluey,” the number two most-viewed acquired title, from BBC Studios in 2019.
Disney CEO Bob Iger confirmed more plans are on the way, particular when it comes to its partnership with Netflix.
“We’ve actually been licensing content to Netflix, and are going to continue too,” he told investors during the company’s latest earnings call. “We’re actually in discussion with them now about some opportunities, but I wouldn’t expect that we will license our core brands to them.”
Similar to Netflix’s refusal to license out its original series, Iger said Disney, Pixar, Marvel, and Star Wars and all likely off limits as they offer “real competitive advantages” and are “differentiators” for the company.
“[Those brands] are all doing very, very well on our platform. And I don’t see why, just to basically to chase bucks, we should [license them out] when they are really really important building blocks to the current and future of our streaming business.”
But analysts have described that thinking as a double edged sword, citing high debt loads and streaming profitability challenges.
In a new stock downgrade for Warner Bros. Discovery on Monday, Wells Fargo analyst Steve Cahall explained future content strategies for legacy players pose a risk as companies weigh licensing content versus maintaining streaming exclusives.
“One way to accelerate EBITDA and free cash flow would be to let marquee titles like ‘The Sopranos,’ ‘Game of Thrones’ or ‘Friends’ go to deep-pocketed streamers instead of Max — likely billions of untapped revenue potential,” Cahall said in regards to WBD. “But, this would come at the expense of Max engagement.”
As legacy giants weigh that choice, Bank of America analyst Jessica Reif Ehrlich described content licensing as a “back to the future” trend for the industry at large.
“This should improve content spending return on investments and accelerate revenue and profitability growth going forward,” she said in a note published earlier this month.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
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