According to new data from Wells Fargo, content spending among the nine leading companies will reach $140.5 billion in 2022, a 10% jump year-over-year. This content spend figure is predicted to increase to about $172 billion by 2025.
If you’ve been keeping up with reports from The Streamable in regards to these top media giants, you’d know the nine companies being discussed are Disney, Warner Bros. Discovery, Netflix, Comcast, Amazon, ViacomCBS, Apple, Lionsgate, and AMC Networks. Their respective streaming services include Disney+, HBO Max, discovery+, Peacock, Amazon Prime Video, Paramount+, Apple TV+, STARZ, and AMC+.
Disney
The Walt Disney Co. has plans to spend $33 billion on content in its fiscal year 2022, which began at the beginning of October. That figure is $8 billion more than the content spend of $25 billion in Disney’s fiscal 2021. The high number is attributed to Disney’s desire to expand its reach on streaming through platforms like Disney+, Hulu, and ESPN+, and less through linear television and film.
The $33 billion total includes content sports rights and other content for ESPN, ESPN+, and other platforms. 7 years ago, the NBA officially announced a new nine-year television deal with ESPN, along with Turner Sports, that will last from the 2016-17 season and end 2024-25. ESPN has spent about $1.4 billion per year, which included ten additional regular-season windows. Its MLB deal
The massive spending strategy showcases just how strongly Disney is prioritizing direct-to-consumer (DTC) content. Its General Entertainment Content unit estimates it will produce 145+ titles throughout the 2022 fiscal year. This includes about 60 unscripted series, 30 comedy series, 25 drama series, 15 docuseries and limited series, ten animated series, five made-for-TV movies, as well as numerous shorts and specials.
Warner Bros. Discovery
Wells Fargo predicted the combined Warner Bros. Discovery would boost its cash content spending to $22.4 billion in 2022 when including sports rights. This figure is up 8.2% from last year.
The significant 2022 content spend will partially go toward rights for sports like baseball and basketball. Turner Sports will allegedly pay the MLB $470 million between 2022 and 2028 and is currently paying the NBA approximately $1.2 billion annually for broadcast rights. Also, following the 2024-25 season, the NBA plans on increasing the amount it charges its broadcast partners.
Netflix
Netflix ranks fourth place in terms of total projected 2022 spending. And when sports are removed from the equation, it shoots up to second place. 2022 films like “The Gray Man” and “Escape from Spiderhead” exhibit why Wells Fargo predicts the platform will spend $19 billion on content in 2022, up 13% from 2021.
However, since original Netflix hits don’t stay on the shelf for long, the company has to constantly create new content, which means constant spending. Thus, its free cash flow margins are weighed down by this even though Netflix’s operating margins appear strong. MoffettNathanson estimated that Netflix’s cash-flow margins would drop to 2%.
ViacomCBS
ViacomCBS launched Paramount+ less than a year ago and is projected by Wells Fargo to spend $3.8 billion in cash on DTC content in 2022, an increase of about 25% year-over-year.
Apple
$8.1 billion is the figure that Wells Fargo predicts Apple will spend on Apple TV+ content in 2022. Apple will reportedly double its content output this year. Highly anticipated upcoming streaming titles include “The Tragedy of Macbeth,” “Fraggle Rock: Back to the Rock,” and “The Afterparty.”
Comcast
For this year, Wells Fargo estimates that Comcast and NBCU will spend $2.2 billion on DTC content, a figure up 22% year-over-year but still lower than all its major U.S.-based competitors. Comcast has previously said that it doesn’t expect streaming service Peacock to break even until 2024, though some doubt that the goal is achievable.
Additionally, investor concerns about profitability are weighing down stocks for the content companies, some of which have seen a reset in valuation levels. For instance, as of the market close on January 7, the stocks of Disney were down nearly 21%, ViacomCBS was down 5%, and Discovery was also down 5% from one year prior. In early 2021, all these companies’ stocks were booming; however, Wall Street is taking a more skeptical approach for now.
Staying in the streaming competition can get expensive, especially for the traditional media companies, which are also still funding programming efforts for their linear TV channels. Traditional media companies are stuck—the only way to compete with the tech companies is by spending, which subsequently compresses their profit margins. They likely hope taking the short-term loss will be worth it in the long run. However, streaming services consumers are only willing to spend so much, so some players could be left behind.