Welcome back to What I’m Hearing+, my weekly deep dive into the data and dealmaking behind the entertainment business. Tonight, I’m presenting part two in a three-part series in which I take a close look at the major streamers, determining which programming works best for them, where they need to grow, and where they can find the content they need. Last week focused on The Tech Lords; this week we’re turning to the incumbents: Paramount+, Peacock, and Hulu.

Julia

I’m not pretending that I can program these platforms, but I can provide clues about what’s working and where capital could be spent more effectively. I conduct my platform chess analysis by using proprietary data from Parrot, and third party data from sources such as Nielsen, Antenna, Google Trends, Rotten Tomatoes, and IMDB. In particular, Parrot offers supply and demand data, based on consumption, search, social media, and social video inputs.

Last week, I offered suggestions regarding The Tech Lords—Amazon Prime Video and Apple TV+—which are spending heavily on original titles, talent, and UX design to compete with the heavy duty catalogs that the incumbent players own. Today, we’re going to focus on a subset of those incumbents—Paramount+, Peacock, and Hulu—which are all in different stages of their journey, but whose businesses tend to inspire more questions than answers.

They’re interesting services, to be sure—full to the brim of strong catalog content, coveted originals, and plenty of valuable low-brow inventory. But they are also still trying to determine their own key points of differentiation against the biggest players, including Netflix and the newly renamed Max. Unlike Netflix, Amazon, or Apple, these platforms belong to larger traditional media companies that still have strong linear businesses that need to be elegantly managed in decline. (Hulu, of course, actually belongs to two traditional mediacos.) In other words, these entities have to balance future growth with their current profit centers, and do it all while keeping up with aggressive, innovative competitors. And to add an even more significant complexifier, all three services are likely to be engaged in M&A in the coming years as dance partners match up, just as Discovery+ and HBO Max did.

These complexities can inevitably impact content strategies. So let’s look at how the incumbents are trying to make what has worked for a broadcast audience also work for streaming audiences—while also trying to reinvent themselves for new audiences.

Of course, this data does not suggest that Paramount Global, or any of its networks, shouldn’t pursue other genres, like thrillers or cooking shows, but my analysis shows that these other categories are already oversaturated, with a slight imbalance between supply (there’s a little too much) and demand (the audience for these genres isn’t fully developed, or it’s getting what it needs elsewhere). Drama and reality are Par+’s bread and butter.

The most intriguing exception is a genre that is frequently under-appreciated. With nearly 3 percent more demand than supply, sci-fi is clearly a potent tool for growing Paramount’s streaming audience. The Star Trek franchise, in particular, offers great promise.

Back when Par+ was still known as CBS All Access, the company relaunched with Star Trek: Discovery, and its most recent efforts, like Star Trek: Lower Deck, are still seeing high demand on the platform compared to most other genres. The gap between supply and demand has been narrowing somewhat with the addition of each new installment, suggesting either audience satiation or that they simply can’t digest it all. (We see a similar dynamic with Disney+’s extended Marvel universe—too many shows, not enough time.) Nevertheless, sci-fi is clearly an important differentiator for Paramount+ compared to Peacock.

Interestingly, the genres in which Par+ is most over-indexed are comedy (-2.9 percent) and true crime (-1.2 percent). Again, this doesn’t mean Paramount should necessarily cut investment in these areas, it’s just a reflection of overall consumer demand compared to the level of supply currently available on Paramount+. (Do we really need 1,086 episodes of Ridiculousness?) It does, however, continue to speak to who the Paramount+ audience is: typically men and typically middle of America.

Perhaps more than any other steamer, Paramount+ has been dogged by questions about who it’s for and how it gets to the next level of mega-scale, even as it grows at a breakneck pace. Looking at the data, however, these aren’t necessarily hard questions to answer. Maybe Paramount can’t outcompete Netflix or Disney+, but it can succeed as a utility play for cord cutters. In a sea of multi-priced offerings, all banking on originals, Par+ offers familiarity. Its strength isn’t so much in creating the next Stranger Things, but being the service that people flick back to after they’ve watched Stranger Things.

Most executives at Paramount+ would disagree with me, I imagine. They’d point to hits like the Yellowstone spinoff 1883 as a sign that Par+ can compete with the heavyweights, and they may be right. But, I’d argue that 1883 is a part of a franchise that found its initial, sizable audience on basic cable and its younger audience through Peacock. Indeed, much of Par+’s most successful original content either builds on franchises or legacy brands. Star Trek: Lower Deck has constant throwbacks to The Next Generation, an early ‘90s staple. Criminal Minds: Evolution is a followup to one of CBS’s longest running series, which remains an incredibly valuable asset. Even the strong, stable demand for children’s entertainment and animation speak to Nickelodeon’s enduring success as a brand with children and parents, alike.

In short, Paramount+’s utility is as the affordable, knowable, and relatable destination for cord cutters. So how does Paramount+ differ from Peacock?

Sitcoms provide interesting learnings. Peacock is home to several critically acclaimed comedies—Rutherford Falls, Girls5Eva, We Are Lady Parts. But none of these shows has ever appeared on Nielsen’s rankings, and they’re not a strong driver of signups like the WWE, NFL, and dramas like Bel-Air, according to Antenna. Girls5Eva, which was lauded by reviewers but failed to find a durable audience on Peacock, was recently sold to Netflix. This is the comedy paradox on streaming.

Comedies, after all, can be incredibly lucrative: Friends was licensed to WarnerMedia for $425 million over five years; South Park went to Paramount+ for $1 billion after its run on HBO Max; Netflix picked up global rights to Seinfeld for $500 million, and Adult Swim spent $70 million for five more seasons of Rick and Morty in 2018.

And comedies are incredible retention drivers, too. They boost engagement sessions as contextual recommendations kick in (i.e., if someone watches Succession and they want a less heavy series to watch before bed, they might turn to Friends or The Big Bang Theory on HBO Max—or The Simpsons on Disney+ or New Girl on Hulu). They’re the type of passive-enjoyment entertainment that supplements more active-involvement dramas that are designed to be strong acquisition drivers.

But it can be hard for a comedy to attain mass appeal without a broad potential audience. That’s not a problem for Netflix and Max, or on NBC. On streaming, however, it’s rare to see comedies or sitcoms acquiring subscribers, especially those that haven’t already found an enamored fanbase. Shows like Rutherford Falls, on Peacock, may be critically acclaimed and beloved—the average episode rating on IMDB hovers around 7.2—but the genre is not going to drive new signups. What Peacock really needs is its own Game of Thrones (or a much bigger Bel-Air) to expand the subscriber base, which can then be directed to comedies viewers didn’t know they were looking for. That will be a top challenge for Jeff Shell’s successor.

Hulu sources confirm that anime overperforms on the platform, and that there’s still room for growth. There’s also strong overlap in the (mostly male, largely Gen Z) demo with the audience for original animated sitcoms, like Solar Opposites. As of October, Hulu was also the second highest female-skewing service (just behind Peacock) compared to Disney+, which skews more male, or HBO Max, which hovers around 50 percent, but can skew more male depending on the mix of series and films. Since anime does lean more male, investing in that audience can help broaden beyond its core female base, which is already served well enough.

Investing in more anime and animated sitcoms when there is increasing demand and when these series command higher levels of engagement can help bring additional eyeballs to Hulu while differentiating it from Disney+, which is still so reliant on its main verticals. Most importantly, if done well, it can take attention away from other platforms, including heavyweights like Netflix, niche players like Crunchyroll, and YouTube.

Right now, Hulu has a young female audience. It could double down on certain subgenres to keep those subscribers happy (except perhaps on romantic dramas, where there is negative 1.6 percent demand relative to supply). But Hulu is also designed as a general entertainment competitor to Netflix or HBO Max, whose audiences used to skew much more male but have started to even out. There is opportunity to expand without too much investment, while capturing a more male audience.

Right now, investing in these spaces would be a pure content play. But as streaming progresses beyond traditional content, there may also be opportunities to parlay anime and animation I.P. into gaming, film, and ancillary initiatives (like merchandise from streetwear designers who already embrace anime), creating new flywheels for Hulu and Disney. If I’m Hulu President Joe Earley, that’s an avenue I’d be exploring.