Never been a better time to be a couch potato, but it’s glum news for firms Battle Royale amongst video streaming cos
New York, Jan. 3: The golden age of TV programming is heading for a grisly finale. Netflix, Amazon, Apple and Hulu are on course to boost their spending on new shows and movies at a faster clip than the growth of the overall video-streaming market. Consolidation among traditional media groups is only adding to the frenzy. Something will have to give.
Netflix set off the arms race. In 2017, the company founded by Reed Hastings directed $6 billion toward licensing and original series like “Stranger Things.”
In 2018, executives plan to earmark up to $8 billion for content, a 33 per cent increase year-over-year.
Across the industry, the number of original TV shows has more than doubled to 455 between 2010 and 2016, according to MoffettNathanson.
Along with Amazon, Hulu and Apple, the total spending on content by the big four media upstarts in 2018 will mushroom some 30 per cent year-over-year to $18 billion, according to a Breakingviews forecast based on analysts’ estimates. Yet the entire global video-streaming market is expected to increase 16 per cent to about $21 billion, reckons PwC.
That means there has never been a better time to be a couch potato, but it’s glum news for the companies themselves. The tangle of options in streaming services and programming chasing a finite number of subscribers suggests the industry is entering into an unsustainable investment battle – and a potential price war may follow as players try to rake in market share.
Netflix looks like a survivor. It was a first mover in video streaming a decade ago, and has 100 million global customers.
The snag is that it is burning cash – up to $2.5 billion in 2017.
Competitors Apple and Amazon could easily outmatch Netflix on content budgets if they decided to abandon financial reason.
Amazon for instance coughed up $250 million for rights to the “Lord of the Rings” TV series, according to a report in Deadline Hollywood.
Facebook and Alphabet’s YouTube are lurking in the shadows, but that could change.
Hulu, with its hydraheaded ownership split among Twenty-First Century Fox, Comcast, Walt Disney and Time Warner, is in a weaker position. Its owners are separately planning their own direct-to-consumer products, adding to the competition. Then there is the possibility of consolidation as media firms bulk up their own content to feed their services. In the latest example, Disney has agreed to buy some of Fox including its stake in Hulu for $52 billion. The result is too many characters chasing not enough action. — Reuters