Streamers are reducing the size of their content libraries.

• To avoid residual payments and licensing fees, streamers are removing content due to profit pressures and increasing competition for users.
• Narrowing content libraries naturally means a need for differentiation.
• Based on current viewership, Fandom data suggests where major streaming platforms should specialize.

Cable TV is increasingly being replaced by streaming services.

As major streamers push ad-supported plans, limit password sharing, and lean into live sports coverage, the goal of exponential subscriber growth, fueled by pandemic lockdowns, has shifted. Wall Street wants profits.

The key to that may be depth, not breadth.

In order to reduce licensing fees, many streaming services have been cutting down on their content libraries.

Due to increasing profit pressures and intense competition for viewers, streamers have started removing content to avoid paying residual payments and licensing fees. This has resulted in two distinct groups among major streaming companies: those who purchase content and those who sell it.

There are two types of streaming companies: those that license content from other studios to enhance their libraries (such as , , and ) and those that rely on legacy content to establish their services and generate revenue through auctions (like , , and ).

Fandom's chief marketing officer, Stephanie Fried, stated that brands acquiring titles are considering operating more cost-effectively by purchasing licenses instead of creating things.

Netflix, being a newer entrant in Hollywood, has fewer long-running, binge-able series. However, the buyers get content that has a track record of reliability and consumer value, which is especially important for the platform. For instance, NBC's "Suits" became a hit on Netflix last year.

Notably, Netflix has already achieved profitability, while Amazon and Apple view streaming as an additive, not core, aspect of their businesses. The other major streaming companies are still striving for profitability.

Narrowing content libraries naturally means a need for differentiation.

Over the past 15 years, the emergence of new streaming platforms led most entrants to adopt a "one-size-fits-all" approach, aiming to be the only service needed. As a result, many streaming services began to resemble each other in terms of user interface.

Streamers should analyze their subscribers' content consumption habits and choose complementary shows and films that have not been licensed yet, according to Fried. This could help them maintain a competitive edge as the landscape becomes more crowded.

The model has been effective for smaller streaming platforms such as BritBox, which offers a wide range of British dramas, mysteries, and period pieces, and Shudder, which focuses on the horror genre.

According to Fandom's data, Netflix could potentially gain success from adding similar nostalgic sitcoms to its lineup, such as "Friends," "The Office," "Fairly Odd Parents," "Hey Arnold," "Boy Meets World," "American Dad," and "Saved by the Bell," which are all owned by networks like Nickelodeon, Paramount, Disney, and NBC.

Fried stated that Fandom has a "really good sense of the overlap between all of these walled gardens."

Viewers have been captivated and frightened by shows on Apple TV+ such as "Severance," "Defending Jacob," "Home Before Dark," and "Servant." This type of dark investigative thriller with a focus on character-driven narrative would complement shows like Warner Bros. Discovery's "The Leftovers," Netflix's "Haunting of Hill House," and the Disney-owned early seasons of "Twin Peaks," according to Fried.

On Amazon Prime Video, viewers have chosen action-packed shows such as "The Boys," "Jack Ryan," "Reacher," and "Invincible," as well as high fantasy series "The Rings of Power" and "Wheel of Time." Fandom's data suggests that shows like Netflix's "Jupiter's Legacy," Warner Bros. Discovery's "My Adventures with Superman," Paramount's "Mayor of Kingstown," and Disney's "The Americans" would also appeal to the streamer's audience.

Fandom's data could provide streamers with insights into which shows they should invest in to create new products.

Disney+ offers family entertainment, and Fried believes that Disney's best chance to stand out is by focusing on being the top provider of kids and family-friendly content. Hulu has been successful with "feel good" sitcoms and dramas, according to Fandom's data. "Parks and Recreation," "The Fresh Prince of Bel-Air," and "The Nanny" could be good additions to Hulu's lineup, along with Netflix's "Queen's Gambit," "Black Mirror," and the BBC show "Orphan Black."

Peacock specializes in crime dramas and medical series, while Paramount+ offers sci-fi content. Max has long been known for its high-quality prestige shows, and high fantasy series like "Game of Thrones" and "The Last of Us" have attracted younger audiences.

"When viewers are considering cutting your service, it's like, 'I can't, because they have all of my X type shows,' Fried said.

Peacock is the streaming service of NBCUniversal, the parent company of CNBC.