A ROUGH PRODUCTION YEAR due to the pandemic and increased competition for streaming services has “necessitated an increased program budget for Netflix Inc. in this and the coming years,” a new S&P Kagan report says.
Kagan, S&P Global Market Intelligence’s media research unit, has estimated Netflix’s amortized content spend at US$13.6 billion this year (C$17.2 billion), which includes US$5.2 billion (C$6.6 billion) positioned for originals for 2021.
Kagan forecast Netflix’s amortized spending could reach over US$18.92 billion in 2025.
Over that period, Kagan predicts more focus will be put on originals, with 14% growth annually.
“The launch of new subscription video-on-demand players, such as The Walt Disney Co.’s Disney+, AT&T Inc.’s HBO Max, Comcast Corp.’s Peacock and ViacomCBS Inc.’s Paramount+, resulted in swaths of content being held back as each looks to populate their own services,” the report says.
Kagan expects distributors to continuing reserving rights for their own services, although “some rights deals have lengthy contracts and would either require buying out the contract or waiting for it to expire.”
According to the report, “Netflix has prepared for this trend since entering the originals market in 2012 as it expected studios would eventually hold back programming.”
Netflix has been increasing the amount it spends on original content (including co-productions) versus acquired content for years now.
“By 2014, about 6.8% of spend came from new orders and increased to about 37.8% of the budget in 2020. As the service focuses more on new content, we expect that to grow closer to 50% by 2025,” the report says.
