Amazon, Netflix Are Spending As Much On Shows As Major Networks
They’ve both doubled their spending on original content over the last two years
If it seems like Netflix and Amazon are inching toward major network status, it’s because they are. On Monday, Netflix surprised everyone by announcing higher-than-expected gains in its quarterly earnings. And talking to Reuters, J.P. Morgan Securities analyst Doug Anmuth reasoned that “the benefits of NFLX-produced original content including attractive economics and greater control are clear and we believe returns on original spend are high.”
But a study from IHS Markit also came out this week, revealing that it’s no mistake that original television series from these streaming services are doing so well. The report found that both media companies are gaining ground with major networks by doubling their spending in the last two years. In fact, they’re investing more in new programming than the likes of HBO and Turner, and have spent almost as much as CBS.
ABC and NBC are still top dog, according to IHS’s World TV Production Report 2016. ABC’s parent company Disney spent $11.84 billion on television, while NBC spent $10.27 billion. But between 2013 and 2015, Amazon increased its spending from $1.22 billion to $2.67 billion. During that same period, Netflix doubled spending from $2.38 billion to $4.91 billion. Meanwhile, HBO spent just $2.0 billion on new content, while Turner dropped $3.8 billion. CBS spent $5.7 billion.
Tim Westcott, senior IHS senior analyst, said in a press release that such numbers prove “more and more consumers are watching content online, shaking the foundations of the traditional TV industry.” But not quite to the brink of destruction. “However, it’s premature to declare that the era of linear TV is already over, and Netflix and Amazon have come hard on the heels of a boom in production of original drama and comedy by the likes of AMC and FX in the US,” he said. In 2013, there were 96 new scripted shows on basic cable, followed by 138 in 2014. Last year, there were 148.
This uptick ultimately proves that Netflix and Amazon are putting their money where their mouths are. Earlier this year, Amazon vowed to double their spending on content in the latter half of 2016 to stay competitive, and triple their offering of new content to customers. Netflix borrowed a billion dollars last year to bring new content to their platform as well. It also promised to make half of it’s streaming catalogue original content. And it’s safe to say all this is good news for consumers, who only need worry about how to manage an already packed binge schedule with even more new shows. It also shows that when it comes to producing television, you get what you pay for.