Americans watched more streaming video last year than ever before. In all, U.S. viewers streamed more than 19.4 million years of content in 2022, up 27% according to Nielsen's 2022 "Streaming Unwrapped" report.
The combination of new and expanded streaming services that debuted last year helped fuel the rise. For example, Paramount Global introduced Paramount+ last year, while Netflix (NFLX -3.92%) and Disney (DIS 0.18%) each launched an ad-supported tier. These lower-cost options helped attract bigger audiences than ever before.
The report highlighted how important original content is to streaming platforms as a competitive advantage. In fact, in a growing number of cases, original programming outperformed acquired content, in some instances by a wide margin.
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Original series winner: Netflix
It should come as no big surprise that Stranger Things was the winner by a landslide last year, with audiences watching 52 billion minutes of the hit program. The science fiction horror show, which has been described as a "love letter to the '80s," was not only the top streaming original series, but also the top streaming program period.
Rounding out the top 3 original series on streaming platforms were crime drama Ozark and supernatural horror comedy Wednesday -- both Netflix originals. Wednesday's inclusion is particularly notable considering the series didn't debut until late November and had only eight episodes, while Stranger Things and Ozark had 34 and 44, respectively. This suggests that on a per episode basis, far more viewers watched Wednesday than any other streaming original in 2022 -- in just the last 36 days of the year, according to the report.
Another notable takeaway from the report? Netflix held 13 of the top 15 spots for streaming originals. Amazon Prime's black comedy superhero series The Boys came in at No. 11, while the company's $450 million production, Lord of the Rings: The Rings of Power, came in at No. 15 -- the only two non-Netflix originals to make the list.
Movies winner: Disney
Much like Netflix did in the streaming originals category, Disney dominated the streaming movies category -- due primarily to the theatrical movie side of its media business.
Animated musical comedy Encanto came in at No. 1 with 27.4 billion minutes streamed, while animated fantasy comedy Turning Red came in at No. 2 with 11.4 billion minutes. Musical comedy Sing 2, released on Netflix (though not an original), rounded out the top 3, garnering 11.3 billion minutes.
Other notable entries included the Netflix original movie The Adam Project (6.1 billion minutes), Disney's Hocus Pocus 2 (5.7 billion minutes), and Netflix's Don't Look Up (5.1 billion minutes) -- all of which were original movies released on their respective streaming platforms.
Disney had 10 of the top 15 movies on streaming last year, with Netflix claiming the remaining five.
The other side of the coin
Nielsen noted that even as original content "came of age with audiences in 2022," there's another side to the story. In terms of most streamed programming overall -- which included original programming, movies, and acquired content -- only four titles were original content. Acquired television shows with long track records and lots of seasons, including NCIS, Grey's Anatomy, Criminal Minds, Gilmore Girls, Seinfeld, and The Simpsons, still commanded the vast majority of viewing on streaming services.
"This highlights the immense attraction that library content holds for viewers who spent billions of minutes throughout the year watching popular titles," the report noted.
The data suggests that streaming platforms will continue the tug-of-war between generating costly original content and generating profits, trying desperately to strike the right balance.
What to do?
The information in Nielsen's report provides investors with some much-needed context, but there isn't any action investors need to take right now based on the data. On the other hand, as Netflix and Disney are arguably the two biggest, best-positioned players in the streaming video space, investors should keep an eye on profits -- or the lack thereof.
Netflix closed out 2022 with net income of roughly $4.5 billion and free cash flow of $1.6 billion, making it the only major streaming platform to generate a profit. That said, there are some concerns that operating expenses are going in the wrong direction.
For its part, Disney's direct-to-consumer segment incurred an operating loss of more than $4 billion in fiscal 2022, leading to a steep sell-off late last year. The return of Bob Iger as CEO and assurances that the company is on track to be profitable by 2024 have placated investors for now, but this too bears watching.
This year could be a watershed moment for video streaming services, and all eyes will be on the bottom line.
