Netflix Was on Track to Outspend All of Hollywood, Then 2 Giant Mergers Dwarfed Its Plans
Netflix was on track to outspend Hollywood studios on content, but two recent mergers between media giants are dashing that trajectory, according to a study released Monday.
According to content spending numbers reported by research firm Ampere Analysis, Disney and Fox are projected to spend $22 billion per year on both original and acquired content. Similarly, Comcast and Sky are expected to spend $21 billion in 2018. Netflix, which is expected to spend $8 billion this year, so would have to triple its spending to compete with the media giants.
Comcast made the winning bid to acquire Sky, a London-based satellite broadcaster, for $39 billion in September. Earlier this summer, Disney and 21st Century Fox finalized details of a $71.3 billion merger that is set to become official during the early part of next year.
Ampere’s research also shows that the two recently merged media companies are vastly outspending competitors. Combined, Disney/Fox and Comcast/Sky are spending more on content than the 10 next highest-spending companies, Ampere reports.
That means the companies account for $2 of every $5 content dollars spent in the US and $1 of every $5 spent worldwide.
In preparation for launching its own streaming service next year, Disney prepared to begin pulling its content from Netflix. Comcast, too, has over the years adapted its business model to offer its content via internet streaming.
The Ampere report points out that the two mergers bolster their respective companies’ place in the market, and stand to make it more difficult for independent producers—like Netflix, despite its size—to negotiate good deals.