Big three SVod players expected to spend $10 bn on original content by 2022: TDG
MUMBAI: The amount invested by the big three subscription video on demand (SVod) players Netflix, Hulu, and Amazon Prime Video on original content will triple to $10 billion annually by 2022, according to a new report published by The Diffusion Group (TDG).
The report further noted that the big three SVoD players will also shift an increasing percentage of their content budgets from licensed content to originals, according to a study by TDG.
“The Big-3 SVOD players own 60% of TV streaming time. And they are looking to maintain if not grow this share by creating compelling originals that serve both to attract new users and retain existing subscribers even as subscription rates increase” noted TDG senior advisor and author of the new report Brad Schlachter.
Just how important are originals to retaining subscribers? According to TDG’s original research, extremely important.
Among Netflix subscribers, 21% rank originals as “absolutely critical” in their decision to keep using Netflix, while 41% rank them as “very important.” “The data is unequivocal,” says Schlachter, “though it varies among the Big-3 SVOD providers.”
Much like HBO decades ago, the Big-3 now have a much better understanding of the limits of licensed content and the benefits of a viable slate of originals. “Of course, not all originals find an audience or generate a huge buzz,” says Schlachter. “But when they do, it can change the fortunes of a company. Just look at what The Handmaid’s Tale did for Hulu, or what House of Cards did for Netflix.”
As studios like Disney pull their most compelling content from Big-3 SVOD libraries, the necessity of a strong slate of originals becomes all the more obvious. But the Big-3 are not the only players eyeing a larger slice of the originals on-demand streaming market. In fact, companies as diverse as Facebook and Apple are investing in original TV-quality programming to distribute directly to consumers. Certainly, Disney’s initiatives to launch its own D2C ‘channels’ will make it a potent competitor in this space.