Media companies’ embrace of the mindset “spend big or go home” on content is apparently over entering the new year.
A study from Ampere Analysis suggests that global content spending will increase just 2% in 2023 from 2022 — the lowest growth in more than 10 years, excluding the COVID-driven slump of 2020. This is a reversal from 2022 when media companies upped content spending 6% to $238 billion, driven primarily by subscription video-on-demand (SVOD) platforms. Despite some degree of caution in the second half of last year, SVOD services collectively spent over $26 billion on original content in 2022 — led by Netflix’s $17 billion in productions.
Economic headwinds across the globe will put pressure on household spending and advertising investment, leading companies to implement cost-saving measures and reduce content expenditure. For instance, following Netflix’s first global decline in subscribers in early 2022, the service announced it would plateau its investment in content during 2023.
This year, Disney and Warner Bros. Discovery are expected overtake Comcast to become the leading investors in original content. Disney spending will top $10.5 billion, with Warner Bros. Discovery exceeding $9.5 billion. Netflix will continue to lead SVOD spending, generating more than 25% of the worldwide original content investment.
The spending tally for Warner Bros. Discovery is noteworthy considering the company spent much of 2022 cutting back on spending in an effort to realize more than $4.5 billion in merger synergies, and reduce its corporate debt level.
Meanwhile, content investment by commercial and public broadcasters continues to linger below pre-pandemic levels, driven by declines in broadcast TV advertising revenue stemming from wider economic weakness and the ongoing shift of viewers to streaming platforms. In 2023 commercial broadcasters are expected to face a 3% decline in content investment.
“SVOD services will still see an increase in total content investment in 2023 but a lesser 8% year-on-year growth compared to 25% in 2022,” Hannah Walsh, research manager at Ampere, said in a statement. “Services will continue to focus on original content to compete in a crowded, cost-sensitive market, but we are already seeing a shift in content commissioning to incorporate a greater volume of cheaper unscripted formats.”