• Streamonomics reports indie content spend up 25% and now accounts for 65% of production activity
New Streamonomics research published this week by film and TV-focused fintech platform Purely Capital reveals that amidst halts in production due to the global pandemic, the gross cash amount spent producing and licensing new entertainment content (excluding sports) soared by 16.4% in 2020. Next year it is expected to increase further to over $250 billion. (All amounts US$)
These are the top-line findings from Purely Streamonomics, the new in-house research and analytical team at Purely Capital, a business that provides receivables finance to film and TV rights owners so as to accelerate payments for their content from streaming platforms.
The Streamonomics report, involved extensive primary research, including scraping from forensic research of financial reports filed over the last year with the US Securities & Exchange Commission (SEC) presents the most detailed up-to-date picture published so far of how audience demand, content expenditure, and TV and film (or production) budgets all reached all-time highs.
Even more spending growth in the short-term is also predicted as a new wave of ad-supported platforms start gaining a stronger foothold around the world, alongside the subscription-funded services that have been driving the streaming marketplace until now.
Streamonomics: Growth across the globe
The research shows that production spend from companies based in North America is up 16.1%, in line with the overall figure. European company spend, which is currently less than a quarter of that in the US and Canada, rose by 11.8%. This figure is also expected to rise in Europe as local streamers such as Viaplay in the Nordics and Movistar+ in Spain expand their offering.
Dramatic uplifts can also be seen from regional business spend in the smaller markets of Africa and the Middle East (+46.3%), Latin America (+32.9%) and Oceania (+32.5%), fuelled by rapidly growing local streamers such as Shahid VIP in the Middle East, which has recently committed to spending an additional $100m per year on original content.
New Big Four
The planet’s biggest single spender on content remains The Walt Disney Company with a grossed-up total of $28.6 billion for 2020 – which is more than the spend across the whole of Asia ($27.7 billion) last year.
The recent announcement that Warner Media and Discovery are being combined into a unified media empire whose content spending totalled $20.8 billion means that Netflix has now been pushed into third place on the Hollywood spending charts with its $15.1 billion outlay last year.
Once Amazon completes its own acquisition of MGM, that combined entity would rank as the fourth largest North American production force with a content spend of $11.8 billion.
On that basis these top four companies alone, with combined spending of $76.3 billion, almost equate to the entire worldwide spending outside of North America ($77.3 billion).
Opportunities for independents
But Purely Streamonomics’ global research also found that spending by Netflix and the Hollywood major studios on original content only tells part of the story. In particular, twice as much money is now spent around the globe co-financing and acquiring the rights to independently made feature films and television programming.
Moreover, researchers found that indie content spending jumped by 25.3% year-on-year in 2020 and now accounts for 65.5% of the world’s film and TV production activity.
Streamonomics: Key factors driving increased spend
The research also showed that, in the US, average budgets across all new series – scripted, unscripted, daytime and kids – was on the rise, up 16.5% in 2020.
In TV and film, this budget inflation has largely been created by three main factors: first streamers and producers are fighting for talent exclusivity, especially with regard to contracting top names and locking them in for future seasons of a show.
Second, production costs have had to rise in order to deliver lavish and impactful shows that stand-out in the marketplace and act as subscription drivers to a platform, such as Disney+’s The Mandalorian and Wandavision.
Third, the cost of introducing and monitoring COVID protocols in 2020 added 20%-30% to production budgets. These costs look to set to remain in place in the immediate term, and the introduction of “green production initiatives” could see a further 5%-10% added over time.
Purely Capital’s founder and CEO, Wayne Marc Godfrey, comments: “What is remarkable about these record numbers is that the industry’s spending has yet to bump up against any natural ceiling. Streaming is not just displacing traditional sources of entertainment revenue such as pay-TV and linear broadcasting, it is actually expanding the global marketplace for video.
“Our research also shows that the time has come for indie producers to take to the streamers their biggest and best ideas – whether scripted or unscripted. The streamers are also co-producing and acquiring more ready-made content than ever before too – so it’s no longer just about producing an ‘Original’ for them.”