Streaming content licences

Even services that make their own shows license much of what they stream, from studio films to old sitcoms, under deals signed months or years before the content goes live and paid over the licence window. The accounting has to answer when the deal becomes an asset, at what amount, and how it is spread. This guide explains the recognition point for content licences, works through a three-year licence paid in instalments, and covers amortisation over the window, multi-season and output deals, presentation, the licensor's side and US GAAP.

By Muhammad Bilal, Chartered Accountant. Reviewed by Awais Jameel, Chartered Accountant. 5 minute read.

Short answer

Streaming content licences give a platform or broadcaster the right to show films and series it does not own for a limited window. Under IFRS, the licensee usually recognises the licence as an intangible asset, with a liability for unpaid fees, when the licence period begins and the content is available for use; before then, a signed deal is a commitment, disclosed but not recognised, and any payment made early is a prepayment. If fees are paid over the window, the asset is measured at the cash price equivalent, the present value of the payments, and the difference is interest. The asset is amortised over the window in the pattern of expected viewing, usually accelerated. Content licences are excluded from IFRS 16. In this guide's example, a US$ 9 million three-year licence is recognised at 8.58 million.

At a glance

Signed, not yet available
Commitment, disclosed
Licence period begins
Asset and liability
Paid over the window
Present value, then interest
Amortisation
Over the window, by expected viewing
IFRS 16
Does not apply
Licensor
Revenue when the window opens
Streaming content licencesSigned, not yet available: Commitment, disclosed; Licence period begins: Asset and liability; Paid over the window: Present value, then interest; Amortisation: Over the window, by expected viewing; IFRS 16: Does not apply; Licensor: Revenue when the window opens.KEY FACTS AT A GLANCEStreaming content licencesSigned, not yet availableCommitment, disclosedLicence period beginsAsset and liabilityPaid over the windowPresent value, theninterestAmortisationOver the window, byexpected viewingIFRS 16Does not applyLicensorRevenue when the windowopensTax BakersStreaming content licencesSigned, not yet available: Commitment, disclosed; Licence period begins: Asset and liability; Paid over the window: Present value, then interest; Amortisation: Over the window, by expected viewing; IFRS 16: Does not apply; Licensor: Revenue when the window opens.KEY FACTS AT A GLANCEStreaming content licencesSigned, not yet availableCommitment, disclosedLicence period beginsAsset and liabilityPaid over the windowPresent value, then interestAmortisationOver the window, by expected viewingIFRS 16Does not applyLicensorRevenue when the window opensTax Bakers
Key facts at a glance, as set out in this guide.

When do content licences become an asset?

A licence of a film or series is an intangible asset under IAS 38: the licensee controls the right to show the content and expects benefits from it. IFRS does not say exactly when to recognise it, but practice follows the point at which the licensee obtains control of the right, which is usually when the licence period begins and the content has been delivered and is available to show. Before then, the deal is an executory contract: both sides still have to perform, so the licensee discloses the commitment rather than recognising an asset and a liability. Payments made before the window opens are prepayments. Each title or season in a deal is recognised when it becomes available. See media accounting.

Why are content licences not leases?

IFRS 16 excludes rights held by a lessee under licensing agreements within the scope of IAS 38 for items such as motion picture films, video recordings, plays, manuscripts, patents and copyrights. So a licence to stream a film is not a lease, even though it conveys the right to use something for a period in exchange for payments, and there is no right-of-use asset or lease liability. For the general test of whether a contract contains a lease, see identifying a lease.

Content licences: a three-year licence paid in instalments

A streaming service signs a deal in October to license three seasons of a comedy series for three years from 1 January, the start of its financial year, for US$ 3,000 thousand a year, payable at the start of each year. The episodes are delivered in December. The service's incremental borrowing rate is 5%, and it expects 50% of the viewing in the first year, 30% in the second and 20% in the third.

At its year end before the window opens, the service has only a commitment of 9,000 thousand. On 1 January, it recognises an asset at the present value of the three payments, 3,000 + 3,000 ÷ 1.05 + 3,000 ÷ 1.05² = 8,578 thousand, pays the first 3,000 thousand and holds a liability of 5,578 thousand for the rest.

Expense and cash paid each year for the licence (US$ thousand)Expense and cash paid each year for the licence (US$ thousand)4,5683,000Year 12,7163,000Year 21,7163,000Year 3AmortisationInterestCash paid
Expense follows viewing; cash follows the payment schedule.
US$ thousandYear 1Year 2Year 3Total
Amortisation4,2892,5731,7168,578
Interest2791430422
Cash paid3,0003,0003,0009,000

Over the three years, the service expenses 9,000 thousand, the same as the cash paid, but split between amortisation of 8,578 thousand, charged mostly in the first year when most viewing happens, and interest of 422 thousand on the deferred payments.

How are licensed titles amortised?

Over the shorter of the licence window and the period the service expects to show the content, in the pattern of expected use. For a streaming service, that usually means accelerated amortisation based on expected viewing; for a broadcaster licensed to show a film a set number of times, it may be based on the number of showings, often weighted towards the first showing, which attracts the largest audience. If the service stops showing a title before the window ends, the remaining cost is written off. See content library amortisation.

How are output deals and multi-season deals treated?

An output deal commits a service to license all films a studio releases over several years, at prices set by formula. Nothing is recognised for films not yet made; each film becomes an asset when its window opens, and the commitment is disclosed. For multi-season deals, each season is recognised when it becomes available. If the expected benefits of committed content fall below its unavoidable cost, for example because the service is closing a channel, the commitment may need an onerous contract provision under IAS 37. See onerous contracts.

How are licensed content and its cash flows presented?

Practice varies. Some broadcasters present programme rights they will use within a year as current assets, alongside inventory, while streaming services typically present content as a non-current intangible asset. Companies that treat content as part of their operating cycle classify licence payments in operating cash flows, while others classify them as investing cash flows for acquiring intangible assets. The policy should be disclosed and applied consistently, and large content commitments are disclosed by year.

How does the licensor account for the same deal?

A licence of existing content is usually a right to use intellectual property under IFRS 15, so the studio recognises revenue when the licence period begins and the content is available to the licensee, here on 1 January, rather than over the three years. Because payment is spread over the window, the studio considers whether the contract contains a significant financing component. See licences under IFRS 15; music licences paid by the stream are covered in music royalties.

How does US GAAP differ?

ASC 920 sets explicit conditions: a licensee recognises the asset and liability when the licence period begins, the cost of each programme is known or reasonably determinable, the programme has been accepted and it is available for its first showing. Since ASU 2019-02, licensed content monetised as part of a group is amortised based on expected use and tested for impairment with the rest of the group. Content licences are also outside the US lease standard. See sports media rights.

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Questions people ask

When is a content licence recognised as an asset?

Usually when the licence period begins and the content is available for use; before then it is a commitment, and any payment is a prepayment.

Are content licences leases under IFRS 16?

No. IFRS 16 excludes licences of films, video recordings and similar items within the scope of IAS 38.

How are licence fees paid over the window measured?

At the cash price equivalent, the present value of the payments, with the difference recognised as interest.

How is licensed content amortised?

Over the shorter of the window and the expected period of use, usually accelerated in line with expected viewing.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IAS 38 Intangible Assets
  2. IFRS Foundation: IFRS 16 Leases
  3. IFRS Foundation: IFRS 15 Revenue from Contracts with Customers
  4. FASB Accounting Standards Codification: Topic 920, Entertainment: Broadcasters
  5. FASB Accounting Standards Update 2019-02: Improvements to Accounting for Costs of Films and License Agreements for Program Materials

Rules and fees change. If you are reading this long after October 10, 2026, confirm the figures with the source before you rely on them.

MediaMedia accounting: the key IFRS issuesMediaContent library amortisationIFRS 15Licences of intellectual property under IFRS 15

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This guide is general information. It is not tax or legal advice for your situation.