With potentially serious implications for film and TV producers, two merged media giants — Disney/Fox and Comcast/Sky — will account for $2 of every $10 spent on content globally in 2018, according to Ampere Analysis.
Ampere said that in the US the proportion is much more significant, with the two companies accounting for 40% of the money spent on content. Ampere’s research suggested that Disney/Fox will have spent $22 billion on originated and acquired content in 2018, while for Comcast/Sky the figure is $21 billion.
Analyst Daniel Gadher commented that this is more than the combined outlay of the next 10 largest content spenders in the US, including OTT platforms Netflix and Amazon.
He said, “To some extent, the increasing level of consolidation is a reaction to the growing power of online video platforms. Companies such as Netflix and Amazon continue to invest significantly in content, a trend which shows no signs of abating.
“We expect Netflix to spend over $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. Prior to the recent mergers, Netflix was on course to catch — and overtake — the top Hollywood studios by content spend. However, in light of the two new combined entities, Netflix would now need to triple spend to achieve this feat.”
Gadher said that wielding such financial authority not only strengthens both entities’ positions in the global market, it protects against the rising strength of online video. Each of the two entities controls an increasingly vast library of original content ready to be exploited through direct-to-consumer offers. Disney has already indicated it will stop licensing content to Netflix in favour of its own direct to consumer offer, a service which will have even greater appeal with the addition of Fox assets.
He said: “One implication of this consolidation is the effect on independent producers. 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 favourable deals.”