Confinement was the breeding ground for many streaming companies will gain new subscribers. But now the war focuses on what is more difficult to achieve new users. Therefore, they spend over $ 100 million in new content according Anna Nicolau and Christopher Grimes in the Financial Times.
The top eight US media groups plan to spend at least $ 115 billion in new movies and tv shows next year looking for a video streaming business that lose money for most of them.
The huge investment outlays come amid concerns that it will be harder to attract new customers in 2022 after the pandemic-driven growth in 2020 and 2021. The alternative, however, is to stay out of the rush of overland transmission. .
“There is no going back,” said the media analyst Michael Nathanson of MoffettNathanson. “The only way to compete is by spending more and more money on premium content”.
Spend to, at least, not be left behind
Most companies, a list that includes Walt disney, Comcast-A, Time Warner Y Amazon, are prepared to accumulate losses in their transmission units. Including sports rights, the estimate of total spending amounts to about 140,000 million dollars.
It is probable that the investment of Disney in streaming content grow between 35% and 40% in 2022, according to estimates of Morgan Stanley. The company’s spending on all new movies and television shows is expected to reach $ 23 billion, though the number rises to $ 33 billion, including sports rights, a 32% more than your total content spend in 2021 and a 65% from 2020.
Disney’s programs targeting 2022 include a tally of Pinocchio starring Tom Hanks, a new installment of the franchise Cars y Obi-Wan Kenobi starring Ewan McGregor. Netflix, ViacomCBS Rg-A, Fox y Apple they also intend to spend billions of dollars on content.
“The real headline in 2022 is how much money has been allocated to platforms for content,” he said. John Sloss, Partner at Sloss Eckhouse Dasti Haynes Law Firm and Director of Cinetic Media, a talent management and consulting agency. “It’s just mind blowing.”
The subscriber growth has slowed down to Netflix, Disney’s streaming service Disney Plus and others in recent quarters. The firm’s executives blamed a weaker scheduling schedule due to production delays related to the coronavirus, a problem that plagued the entire industry.
But the fact that even the industry leader must invest heavily to produce shows and keep up with competitors has made some investors wonder if streaming video is a good deal.
Netflix will spend more than $ 17 billion worth of content next year, a 25% more than in 2021 and 57% of the 10.8 billion dollars it spent in 2020. The company expects to reach the breakeven and have a positive free cash flow in 2022.
“This will be a milestone for Netflix,” if it achieves those goals, he said. Tuna Amobi, CFRA Senior Media & Entertainment Equity Analyst.
“However, for more traditional media companies, the transition from traditional television and movies to streaming” has significantly diluted profit margins, “he noted. Morgan Stanley Recently.
“The market is increasingly concerned that there is no pot of gold at the end of this rainbow,” said the bank’s analysts.
Costs have risen across the board as the biggest entertainment and tech companies rush to churn out more shows to power their streaming services. Finding locations to film in Los Angeles has become difficult. Strong scenarios, historically a niche form of real estate, have attracted investment from private equity firms Blackstone y TPG.
“Due only to competition for talent, for everything that is involved in productions, the costs of content have increased,” he told investors. Christine McCarthy, Disney Chief Financial Officer.