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Streaming Companies Spending Even More to Keep Up with Traditional Studios — Will It Work?

Jeff Kotuby

Netflix and Amazon are spending on content in a way that mirrors some of the largest production studios in the world.

According to a report by Ampere Analysis, companies like Amazon, Netflix, WarnerMedia (owner of HBO Max), and Disney have all ramped up production on original and licensed films, fueled greatly by the COVID-19 pandemic.

The report showed that Netflix spent the most on original films, which have powered its commissions each quarter since Q4 2018. New projects announced in Q1 2021 make for the highest number of film orders in a single quarter in the company’s history. Netflix is also looking to add original games to their streaming service, as indicated on their Q2 2021 investor call.

By comparison, Amazon far and away features the most licensed movies on its Amazon Prime Video platform and will see that foothold increase thanks to its recent acquisition of MGM. Granted, about 70 percent of MGM’s film library already lived on Amazon Prime Video — but now, the platform will have the entire library and all future films and shows.

“Netflix can now lay claim to true studio status in terms of the global production infrastructure it has established in recent years, but it is still chasing franchise success when it comes to films,” said Ampere Analysis Analyst Alice Thorpe. “What’s clear from its recent commissioning is that the platform is not just relying on sequels to the likes of comic book adaptation ‘The Old Guard’ to make that happen. Building local franchises with crossover appeal in multiple territories is also key to its strategy. Meanwhile, Amazon is buying into the franchise game to enable it to scale up from its critical successes. The global brand recognition that comes with a property like Bond will help further assert Prime Video’s independence from Amazon’s eCommerce business by making it a destination for bonafide blockbusters as well as buzzy indie titles.”

HBO Max and Disney+ were forced to pivot their strategy due to the pandemic, but benefitted from releasing highly-anticipated films straight to their digital platforms. Films like “Wonder Woman 1984,” “Godzilla vs. Kong,” “Zack Snyder’s Justice League,” and “Mortal Kombat” helped propel HBO Max to a stellar start to 2021, with strong subscription gains in Q1 and Q2.

Disney+ also changed their strategy and released films like “Soul,” “Mulan,” “Raya and the Last Dragon,” and the recent “Black Widow” films onto Disney+. Most films were added through Disney’s Premier Access, which allows subscribers to view the film early for a fee, or, in “Soul’s” case, adding it directly to the library for free. “Black Widow” garnered $60 million in Premier Access sales, no doubt showing the power of releasing films directly to the consumer’s home.

Whatever happens in 2022 and beyond, it looks like this new “streaming arms race” era doesn’t won’t end anytime soon, especially with WarnerBros. Discovery and Paramount+ joining the fray.

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