Mega-mergers of Comcast and European pay-TV operator Sky, and Disney’s partial acquisition of 21 Century Fox’s will see the two new entities spending more on content both domestically and worldwide than Netflix and Amazon, according to a study released Monday (Dec. 10).
According to a report from London-based analyst firm Ampere Analysis, two in every 10 dollars spent on global content will come from these two new media powerhouses. In the U.S., the proportion is doubled – four in 10 content dollars.
According to the analysis, the combined projected content spend of the two merged players will reach US$43 billion by the end of 2018. Disney/ Fox will have spent US$22 billion on original and acquired content, while Comcast/Sky comes in at US$21 billion. According to the study, this spending is more than the combined output of the next 10 largest content spenders in the U.S., including Netflix and Amazon.
Prior to the merger activity, Netflix was set to catch up and overtake the Hollywood studios on content spend. However, the study says Netflix will now have to triple its spending to take the lead once again.
“Companies such as Netflix and Amazon continue to invest significantly in content, a trend which shows no signs of abating,” said Daniel Gadher, analyst at Ampere Analytics, in a statement. “We expect Netflix to spend over US$8 billion on a P&L basis by the end of 2018, and the streaming giant has repeatedly stated it will continue to boost its content budget.”
Ampere notes that the increasing level of consolidation is a reaction to the growing popularity of online video platforms. Comcast and Disney’s acquisitions of Sky and Fox respectively strengthens each company’s position in the global market. With increasing competition for eyeballs on video platforms, both mergers create stronger DTC offerings for their parent companies.
“One implication of this consolidation is the effect on independent producers,” added Gadher. “With a shrinking number of content acquirers in the market, the competition for rights will diminish, and this will inevitably impact the indie sector’s ability to negotiate favorable deals.”
(Pictured: Disney CEO Robert Iger)