Netflix’s binge-spending on originals may not be the driver of Hollywood’s content splurge — or, at least, not the main one.
Those are the findings of a research report from Ampere Analysis that — pointing to what’s described as a “Golden Age of Spending” — argues Netflix and other streamers may have sparked the current production binge, but it’s traditional TV players catching up with Netflix that are fueling growing competition in Hollywood and the wall of money behind the current focus on original content and talent. Netflix content chief Ted Sarandos hinted at the effect during an earnings call on Oct. 16, noting, “On a very competitive show, there has probably been 30 percent price escalation since last year.”
“Where SVOD has led in content spend, others have followed and this has resulted in a positive feedback loop, stoking the fires of competition for content and driving up spending,” Daniel Gadher, research manager at Ampere Analysis wrote. “But the nature of competition is soon set to change as the big studio groups pursue their own services. This will create opportunities for local and global indie producers as Netflix and other streaming services seek to replace the content retracted by existing content partners.”
The report indicates global spending on TV, film and sports content grew from $100 billion to $165 billion between 2008 and 2018, representing a 65 percent increase. But the researchers say nearly $50 billion of the growth came during the last five years, as traditional TV companies ramped up their spending in response to new competition from streaming giants.
Certainly Hollywood’s content splurge has come from streaming platforms like Netflix, Amazon and Hulu, as subscription VOD services’ content spend rose from $2 billion a year in 2013 to $19 billion in 2018, the report concedes. “Despite this growth, the vast majority of content spending remains in the hands of commercial and thematic broadcaster groups, which made up $111 billion of the $165 billion spent in 2018,” the Ampere Analysis report adds.
More recent streaming arena entrants like Facebook Watch, Apple and Google-owned YouTube are ramping up investment in originals, even as Netflix faces new competition in the form of WarnerMedia’s HBO Max, Comcast’s Peacock and Disney+.
“The leading U.S. networks are driving the majority of spend, with Disney increasing its outlay from $10 billion in 2013 to $13 billion in 2018. Similarly, NBCUniversal’s content expenditure has risen by over $4 billion between 2013 and 2018,” the report states.
At the same time, Netflix and other streaming giants aren’t likely to draw back on their originals investment anytime soon. “With a loss of content from U.S. studios, OTT platforms have begun to invest in huge volumes of original programming, which will shift content market growth from being acquisition-led to being dominated by increased original content spend,” the report concluded.
Netflix and other streaming giants are facing increased competition from Facebook, YouTube and Apple, as much as existing SVODs like DC Universe and Disney’s upcoming Disney+ service.