Welcome back to What I’m Hearing+, live from Toronto where I’m visiting family for a quick holiday check-in before decamping to the NBA’s in-season tournament. Feel free to drop me a line if you’re also in Las Vegas.

Tonight, a deep dive into who transformed USA Network’s Suits into an unexpected megahit on Netflix: Where did they go after binging the show? And did NBCUniversal actually benefit?

But first…

• The future will be bundled: Verizon recently announced that customers can get an ad-supported combo pack of Netflix and Max for a heavily discounted $10 a month, via Verizon’s “myPlan” service, which gives customers the ability to bundle various streaming subscriptions (including video and audio services, like Apple Music).

  Everyone benefits here: For Verizon, the country’s second-largest wireless carrier after AT&T, these promotions help lure new customers. The bundled content packages also encourage upgrades to unlimited 5G access and unthrottled data capabilities. For Netflix, meanwhile, Verizon serves as a top-of-funnel entry point to its newish ad tier. Netflix already boasts 15 million monthly global users in the tier, but it needs to grow that number to justify its reported $60 CPM rate card, double what Hulu charges despite Hulu having a more substantial advertising subscriber base.

  So far, these initiatives appear to be paying off. Verizon reported that total wireless service revenue grew nearly 3 percent year over year in Q3 to $19.3 billion, with part of the revenue growth coming from “more customers selecting premium unlimited plans.” These plans are built for customers who want to pick and choose their own streaming services and are okay with ads for a discount—a potentially different audience in the U.S. than the one Netflix is marketing to. Combining Netflix with Max, which would have seemed like an act of war in the “walled garden” era, also ensures that different audiences are being reached since Max skews older and slightly more female than Netflix.

  Cross-pollination bundles are becoming increasingly ubiquitous. They’re cheaper, help unify a payment system, and facilitate discovery, which is why Netflix has bundled itself with companies like T-Mobile; and Disney+ launched with Verizon back in November 2019; or why Comcast has worked with Charter; or Xumo with Comcast and Charter; and, most memorably, the Charter-Disney+ ad-supported deal. Whoever wins this game, whether it’s the wireless companies or tech giants, will rule the future.

Interestingly, the most popular next stop for U.S. viewers who watched Suits on Netflix was actually Hulu. According to consumption data from Parrot Analytics, where I work as director of strategy, more than 30 percent of the Suits audience followed up the show by watching a series on Hulu; 20 percent turned to Max; and only 15 percent stayed on Netflix. Among the most popular shows that overlapped with the Suits audience were old network hits like The Good Doctor, How I Met Your Mother, Young Sheldon, Bar Rescue, Brooklyn Nine-Nine, and Law & Order: SVU.

Not surprisingly, the streamers that benefited the least were Apple TV+ and Disney+, whose catalogs have the least in common in Suits. But, perhaps counterintuitively, Peacock didn’t see much of a Suits bump either despite carrying the final season exclusively: Just 9 percent of the Suits audience followed up the show by watching a series on the platform. (Amazon and Paramount+, which are home to several serialized procedurals, landed in the middle of the pack.)

What are the immediate takeaways? For one, despite many viewers flocking to other services after the credits rolled, Netflix kept a large portion of Suits’ streaming audience, meaning the series had a strong referral value for the platform. This is a major factor in determining the overall value of a streaming title: What portion of its audience remains engaged once they are done watching? This is different from retention value, which directly relates to a title’s ability to prevent cancellation among high-risk audiences.

The other revelation, of course, is that licensing a hit show doesn’t necessarily result in audiences flocking to the licensor. Again, only 9 percent of Suits’ audience on Netflix turned to NBCU’s Peacock for additional programming. On some level, this is to be expected: Emergent cultural phenomena like the Suits craze are ultimately less about the show itself—although Suits is a fun show! I binged it, too!—than the platforms on which they’re consumed. And that energy is hard to replicate. (Pearson, a spinoff of Suits, saw a slight bump in demand during the Suits craze, according to Parrot, but peaked at about 11x the average demand of all shows in the U.S., less than one-third the average demand for Suits itself.)

Unfortunately, another lesson for Peacock is that it’s just very hard to beat Netflix. As I’ve observed before, it’s easier for Netflix to license a show like Suits than it is for Peacock to make its own Stranger Things. Yes, Netflix has the cash flow advantage to try its hand at more middle-of-the-road, broadcast-style dramas, like The Diplomat, but the streamer’s real superpower is that it has the scale to license long-running shows (even on a non-exclusive basis), put them in front of its massive, young audience, and give new life to long-dormant I.P.

Of course, Netflix clearly has an ongoing need for licensed fare, too. At an investment conference just yesterday, C.E.O. Ted Sarandos noted that Netflix will start focusing on licensing more content as the opportunity to “license has opened up a lot more.” Which means that content suppliers, like NBCU, also have a certain amount of power in these negotiations. They just have to decide how they want to use it.

Also, of course, it’s not the first time that Netflix has supercharged a network hit by licensing it for its much larger audience. NCIS, Grey’s Anatomy, Criminal Minds, and Suits routinely populated Nielsen’s weekly Top 10 list. (Although, due to differences in measurement approach, these shows did not consistently show up on Netflix’s own Top 10 list in the U.S.) Warner Bros.’ Young Sheldon, which Netflix began streaming on Nov. 24, is also now appearing in its Top 10.

What changed in 2023—and will continue to be the case in the year ahead—is that Netflix’s rivals are no longer willing to operate their streaming divisions at a deficit. Disney, Warner Discovery, Paramount, and NBCUniversal have all shifted to cost-cutting mode, whether that means layoffs, canceling underperforming shows, ending overall deals, or being more discerning in their investments. And on the revenue side of the equation, it has meant being less precious about exclusivity. The result is a streaming landscape that is less fragmented—where content is more frequently traded between platforms—but more clearly divided between content buyers and sellers.

There are only a couple of major players who truly want—and arguably need—access to those long-running dramas and sitcoms, even on a non-exclusive basis. Understanding the audience journey (at scale) can help determine the overall value of a title to the platform receiving and losing it. There is a premium for potentially achieving that level of success: While it’s still difficult to determine what shows have the greatest chance of sparking a Suits-like phenomenon, the value for licensors is in charging more upfront to get the best result from that potential wave of interest, not in trying to convert that audience into new fans of old I.P. NBCUniversal certainly didn’t foresee the full value of a title like Suits, likely resulting in being underpaid for the deal, and it’s unclear if the value of the Suits I.P. today will be the same a year or two from now.

Looking at all the data, and taking into account Sarandos’s recent comments, it’s clear that we’ll see more studios licensing more content, at least in the short term, as streamers seek profitability. Yet, the danger is that Netflix keeps taking advantage of its scale to turn licensed series into ephemeral hits, allowing it to reduce churn even while increasing prices, and further cementing its global dominance. Executives don’t want to be sitting in their offices five years from now lamenting that they once again supplied Netflix with more ammo, to paraphrase my favorite Bob Iger arms dealer quote. But licensing is necessary in this day and age for the suppliers to continue building their own streaming platforms to compete with Netflix, and the key for studios is to be mindful, and careful, about the pros and cons.