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Streaming wars: Content is king, but kings cost money

Pic: RedShark /
2 minute read
Pic: RedShark / Shutterstock

Ten years ago Netflix spent $3bn on content. This year it will spend $17bn. As the world gets used to ads on Amazon Prime, something’s got to give…

There have been contrasting fortunes for some of the world’s most popular streamers at the start of 2024. On the one hand, Netflix posted bravura figures ahead of expectations, has over 260 million subscribers worldwide these days, and plans to maintain its current content spend. On the other, pretty much everyone else is looking at scaling back original productions as a minimum requirement for survival in 2024.

Or are rolling out ads. Advertising is the new black. We wrote about this last year in The inevitable return of TV advertising, and now the ads that Amazon announced back then are with us, and Disney’s have launched as well (though they perhaps seem to have trouble selling inventory — it’s at least 90% trailers for Disney+)

Ad spend is way down this year, though so others are going further. Merger and acquisition chatter involving Warner Bros. Discovery and Paramount was rife at the end of last year, with the rumor mill steadily adding more names as January progressed.

Only Amazon and Apple seem to be immune from the gossip; Amazon dances to its own drum as ever, while Apple appears to be finally reaping the rewards of its long-game ‘quality over quantity’ play. It’s got a shallow catalog compared to others, but what there is is usually good.

Apart from such niceties as needing more subscribers, the key drag on profits for all the companies is content. Content costs, and good content costs even more. Ten years ago, Netflix committed to spending $3bn in 2014 on content. This year, it is allocating a massive $17bn. But while an impressive headline figure, that amount has remained largely static since 2021’s $17.5bn peak. Effectively, it’s a decrease when you factor in inflation.

So, if even the profitable streaming success story is being careful with its content costs, what hope everyone else?

The result is that we will probably see more consolidation in the market as the year progresses, with Warner Bros. Discovery, Paramount, and Comcast subsidiary NBCUniversal all in the current frame and more companies likely to be added to the gossip gumbo. Of course, this is nothing new. The last decade has given us Viacom/CBS, AT&T/Time Warner, Disney/Fox, Time Warner/Discovery, and more. But 2024 could see a further winnowing of the line-up as the costs of competing against the market frontrunners mount up.

Where M&A activity is off the table, we will see aggregation of content instead. After a period where every media company prioritized exclusivity for its own established or soon-to-be-established D2C service, licensing deals are all the rage once more. All the stuff that got pulled off of Service X so that it could appear on Service Y is back again, though what’s different this time round is it’s not the first run series. Streamers have realized that popular second-run and long-tail content is one of the best ways to bump up the viewing metrics they increasingly have to supply to advertisers as they move their business to ad-supported models. 

We’ve already had the news this week that a new combined sports streaming service is launching in the US this fall from ESPN, Fox, and Warner Bros. Discovery. Likely there will be more to come.

Licensing is a much cheaper way of expanding catalogs and increasing the amount of material that can be surfaced to each viewer too. But how much of it you will see on any platform depends on where they are in the streaming pecking order. Netflix co-SEO Ted Sarandos said around the release of its first-ever Engagement Report late last year that, while he was proud of the company's ability to boost library titles, he didn’t see a benefit in Netflix licensing its content elsewhere. 

Content is king, sure. But as anyone who’s watched the world's royal families in action over the years will be all too aware, sometimes the king wants to keep all the jewels for himself.

Tags: Business Streaming