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There’s a reason the top subscription video-on-demand (SVOD) services are in an arms race of sorts to produce original content: it brings in subscribers. In fact more than half (54%) of streaming video subscribers surveyed last year said they had signed up for a service to watch original content, according to the 12th edition of Deloitte’s Digital Media Trends Survey.

Original content also helps with competitive differentiation, as the report notes that consumers now have about 200 SVOD options. And as the content wars heat up between SVOD providers and traditional TV providers, originals can attract more viewers away from legacy TV. (More on this in MarketingCharts’ State of Traditional TV Viewing study.)

The Deloitte survey’s results indicate that original content is an important consideration for subscribers: fully 49% not just agreed but “strongly” agreed that they value the quality of the original content offered.

The study adds to a growing body of research supporting the value of high-quality original content for SVOD providers. Consider that:

The critical acclaim that many of these original shows have earned has also helped, and may be driving more viewing to paid streaming services. In 2017, Deloitte’s study suggests that viewers spent more time streaming from paid than free services, representing a shift from the year prior when the opposite was true.

Viewers are also spending more time streaming video overall: almost half (48%) of all US consumers surveyed streamed TV content on at least a weekly basis, up from 37% in 2016.

Originals to Sell Shoes?

Amazon’s Jeff Bezos has famously said that “when we win a Golden Globe, it helps us sell more shoes.” He has also noted that Prime customers who stream videos not only renew at higher rates but also convert from free trials at higher rates. (Research from Epsilon suggests that about half of Amazon Prime members have streamed video in the past 6 months.)

So in Amazon’s case – unlike other streaming services – the content is more of a means to an end (converting viewers to shoppers) than an end in itself (where the video is the core product).

Fascinating data obtained by Reuters gives some insight into how Amazon scores the success of its originals: by the “cost per first stream.” This metric is the result of dividing a show’s production and marketing expenses by the number of people who stream the program first after signing up. (Reuters describes this as the cost to “hook” a viewer on Prime Video.)

Based on leaked documents reflecting subscribers in the US, UK, Germany, Austria and Japan in early 2017, the most successful programs for Amazon are The Grand Tour Season 1 ($49 per first stream) and The Man in the High Castle Season 1 ($63 per first stream). Considering that a Prime membership costs $99 annually, these programs returned a very profitable cost per new customer.

(A longer list of the programs by this metric can be viewed here.)

In other words, the people who first stream these shows are assumed by Amazon to get hooked on Prime Video, which then translates into greater retention numbers and more shopping on Amazon itself.

A couple of juicy stats to finish with:

  • Amazon’s US audience for all video programming on Prime was about 26 million customers (Amazon has otherwise never released these figures); and
  • Amazon’s top TV shows attracted more than 5 million people worldwide to Prime from late 2014 to early 2017, which Reuters says is as much as a quarter of estimated total Prime sign-ups during that time period.

So originals certainly do drive subscriptions…

About the Data: The Deloitte data is based on a survey of 2,088 US consumers (14+) conducted in November 2017.

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