SEPTEMBER 2, 2020 Tentpoles vs. Long Tails The Popularity Forces Shaping the Streaming Wars Confidential | Parrot Analytics 2020 All Rights Reserved Tentpoles Have Dominated the News… 2 Confidential | Parrot Analytics 2020 All Rights Reserved …and Inflated Budgets… 3 Confidential | Parrot Analytics 2020 All Rights Reserved …but Represent Only a Fraction of the Content Universe We define the long tail of content as the bottom 80% of shows that account for ~20% of content demand. tentpoles = top 20% Platforms TV Shows long tails = bottom 80% 4 Confidential | Parrot Analytics 2020 All Rights Reserved What is a Tentpole vs. Long Tail Show? How Can we Compare Them? 81.6x Average demand 1.7x Average demand 5 Confidential | Parrot Analytics 2020 All Rights Reserved Is TV Becoming Blockbuster Dominated Like the Movies? Tentpoles grow share year over year 90% 80% 70% 60% 50% 40% Demand Share 30% 20% 10% 0% Tentpoles Long Tails 2017 6 Confidential | Parrot Analytics 2020 All Rights Reserved Is TV Becoming Blockbuster Dominated Like the Movies? Tentpoles grow share year over year 90% 80% 70% 60% 50% 40% Demand Share 30% 20% 10% 0% Tentpoles Long Tails 2017 2018 7 Confidential | Parrot Analytics 2020 All Rights Reserved Is TV Becoming Blockbuster Dominated Like the Movies? Tentpoles grow share year over year 90% 82% 83% 80% 77% 70% 60% 50% 40% Demand Share 30% 23% 18% 20% 17% 10% 0% Tentpoles Long Tails 2017 2018 2019 8 Confidential | Parrot Analytics 2020 All Rights Reserved The global attention measurement platform TV360 MONITOR Monitor global content trends across 100+ platforms for 10,000+ TV shows in 38 markets and gain access to exclusive reports and analyses. “Parrot Analytics has come up with a metric that can measure what a program means to a streamer like Netflix. It not only counts viewers but calculates their enthusiasm.” - July 2020 9 Confidential | Parrot Analytics 2020 All Rights Reserved In 2017 the top 5% of titles accounted for 43% of demand The Big Bang Theory 21.78x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 10 Confidential | Parrot Analytics 2020 All Rights Reserved In 2017 the top 5% of titles accounted for 43% of demand The Flash 23.72x The Big Bang Theory 21.78x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 11 Confidential | Parrot Analytics 2020 All Rights Reserved In 2017 the top 5% of titles accounted for 43% of demand Rick And Morty 25.61x The Flash 23.72x The Big Bang Theory 21.78x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 12 Confidential | Parrot Analytics 2020 All Rights Reserved In 2017 the top 5% of titles accounted for 43% of demand Game Of Thrones 61.23x Rick And Morty 25.61x The Flash 23.72x The Big Bang Theory 21.78x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 13 Confidential | Parrot Analytics 2020 All Rights Reserved In 2017 the top 5% of titles accounted for 43% of demand The Walking Dead 64.88x Game Of Thrones 61.23x Rick And Morty 25.61x The Flash 23.72x The Big Bang Theory 21.78x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 14 Confidential | Parrot Analytics 2020 All Rights Reserved In 2019 the top 5% of titles accounted for 48% of demand up from 43% in 2017 The Walking Dead 53.12x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 15 Confidential | Parrot Analytics 2020 All Rights Reserved In 2019 the top 5% of titles accounted for 48% of demand up from 43% in 2017 Saturday Night Live 58.85x The Walking Dead 53.12x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 16 Confidential | Parrot Analytics 2020 All Rights Reserved In 2019 the top 5% of titles accounted for 48% of demand up from 43% in 2017 Spongebob Squarepants 69.79x Saturday Night Live 58.85x The Walking Dead 53.12x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 17 Confidential | Parrot Analytics 2020 All Rights Reserved In 2019 the top 5% of titles accounted for 48% of demand up from 43% in 2017 Stranger Things 81.6x Spongebob Squarepants 69.79x Saturday Night Live 58.85x The Walking Dead 53.12x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 18 Confidential | Parrot Analytics 2020 All Rights Reserved In 2019 the top 5% of titles accounted for 48% of demand up from 43% in 2017 Game Of Thrones 152.17x Stranger Things 81.6x Spongebob Squarepants 69.79x Saturday Night Live 58.85x The Walking Dead 53.12x Difference from the ”Average Title” (1x) (Demand Expressions per capita multiplied by X times) 19 Confidential | Parrot Analytics 2020 All Rights Reserved Major DTC Platforms Focus on Tentpoles 492 Netflix originals reviewed 137 tentpoles deliver 85% Of demand Tentpoles Demand Demand Subscribers 20 Confidential | Parrot Analytics 2020 All Rights Reserved Opportunity for the long tail as the pie grows Cummulative new shows 18,000 16,000 14,000 New shows per year 12,000 1,700+ 10,000 8,000 6,000 Content Supply 4,000 2,000 Long Tail 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 21 Confidential | Parrot Analytics 2020 All Rights Reserved Average demand for long tail shows has been growing every year 160 146 140 135 120 100 100 80 60 40 Average Demand Indexed to 2017 20 0 2017 2018 2019 Long Tail Shows 22 Confidential | Parrot Analytics 2020 All Rights Reserved What type of Content is in the Long Tail? US demand 2019 23 Confidential | Parrot Analytics 2020 All Rights Reserved Current vs. Concluded Series in 2019 Long Tails are mostly concluded shows, Majority of tentpoles are current series Tentpoles Long Tails 38% 44% 62% 56% Current Concluded 24 Confidential | Parrot Analytics 2020 All Rights Reserved Domestic (US) vs. International in 2019 Long tail skews towards non-US origin content Tentpoles Long Tails 30% 36% 64% 70% International Domestic (US) 25 Confidential | Parrot Analytics 2020 All Rights Reserved Where in the world to find long tail gems? Demand Share for international long tail content by origin market Other 21.8% Canada 6.5% UK 31% China 3.3% Japan 8.4% Country Share France 2.9% United Kingdom 31% S.Korea 10.3% Mexico 3.0% South Korea 10.3% India 3.1% Japan 8.4% Canada 6.5% Australia 6% Brazil 3.9% Australia 6% India 31.% Brazil 3.9% Mexico 3.0% France 2.9% Other 21.8% 26 Confidential | Parrot Analytics 2020 All Rights Reserved Genre Differences in the Long Tail Overrepresented among tentpoles Overrepresented among long tails 40% 35% 30% 25% 20% Share of Titles 15% 10% 5% 0% Action and Animation Children Comedy Reality Drama Documentary Adventure Tentpoles Long Tails 27 Confidential | Parrot Analytics 2020 All Rights Reserved Genre Differences in the Long Tail Overrepresented among tentpoles Overrepresented among long tails 40% 35% 34% 31% 30% 25% 20% 17% 17% Share of Titles 15% 10% 5% 0% Action and Animation Children Comedy Reality Drama Documentary Adventure Tentpoles Long Tails 28 Confidential | Parrot Analytics 2020 All Rights Reserved We now live in an attention economy Time is the most valuable resource on the planet “At Netflix, we‘re competing for our customers’ time. So we actually compete with sleep.” Reed Hastings CEO Netflix 29 Confidential | Parrot Analytics 2020 All Rights Reserved Quantifying Demand for Content 1 2 3 Capture the world’s largest Extract the signal Provide the first global audience behavior datasets from the noise content demand measure DemandRankTM System: Downloading / Streaming Higher Creative Participation Blogging Video Sites Streaming Sites Active Consumption Deep Research Social Photo Social Encouragement Media Sharing Sites Public Posting Expressing an Opinion Microblogging Fan & Critic Subscribing to Updates Rating Sites Sites Wikis & Indicating Interest Informational Sites In all In all Across Passive Impressions markets languages platforms Lower 30 Confidential | Parrot Analytics 2020 All Rights Reserved Targeting Supply Gaps in the Long Tail 31 Confidential | Parrot Analytics 2020 All Rights Reserved Dramas struggle in the long tail Top tier dramas punch above their weight, but dramas in the long tail struggle to stand out amid the clutter. Example Example 35% 34% Attention Deficit 33% 32% Attention Surplus 31% 30% 29% 28% Tentpoles Long Tails Title Share Demand Share 32 Confidential | Parrot Analytics 2020 All Rights Reserved Dramas struggle in the long tail Top tier dramas punch above their weight, but dramas in the long tail struggle to stand out amid the clutter. Example Example 35% 34% Attention 34% Deficit 33% 33% 32% Attention Surplus 31% 32% 30% 31% 29% 28% Tentpoles Long Tails Title Share Demand Share 33 Confidential | Parrot Analytics 2020 All Rights Reserved Opportunity for comedies to fill demand in the long tail The reverse is true for comedies – perhaps it is harder to make a broadly popular tentpole comedy and this genre does better appealing to smaller targeted audiences. Example Example 20% 19% Attention 18% Surplus 17% Attention Deficit 16% 15% 14% Tentpoles Long Tails Title Share Demand Share 34 Confidential | Parrot Analytics 2020 All Rights Reserved Opportunity for comedies to fill demand in the long tail The reverse is true for comedies – perhaps it is harder to make a broadly popular tentpole comedy and this genre does better appealing to smaller targeted audiences. Example Example 20% 19% Attention 18% Surplus 17%