Content Spending Slumps in the Post-Peak Television Era

After reaching unprecedented heights, the film and television market is now charting a more cautious path in the post-peak television era.

Several recent forecasts shed light on the slowdown in television content spending, emphasizing the shift in priorities and austerity for major media companies.

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Persistent Growth Amidst Content Cuts

Data reveals that, except for Amazon and Apple, most major streaming platforms will increase their spending on general entertainment and news content by less than 10% over the next few years. Even Amazon and Apple, the tech giants, will see their growth rates decline significantly compared to the so-called peak television era.

Apple’s late entry into original content with Apple TV+ in 2019 makes its figures an outlier, but Amazon’s case is more telling. Amazon’s series content spending growth is expected to fall from a robust 22% CAGR between 2019 and 2023 to just 12.6% from 2023 to 2026, reflecting the broader industry squeeze.

Despite the industry’s focus on cost-cutting, content spending is still set to rise annually. Multiple forecasts predict a 2% increase in global content spending this year, growing to $247 billion from $243 billion in 2022 and 2023. This growth, driven by inflation and new post-strike labor costs, underscores the inevitability of rising production expenses, even as average per-series budgets decline.

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Projected Programming and Production Costs (2024)

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Paramount and AMC Plan to Increase Spending

Two companies, AMC Networks and Paramount Global, are projected to buck the trend with increased spending over 10%. AMC’s content expenditure actually fell during the peak television years, decreasing by about 2% from 2019 to 2023. This trend, driven by the earlier contraction in the cable space, highlights the broader industry’s current challenges.

In contrast, Paramount’s potential merger and acquisition activities could drastically reshape its content strategy, possibly reallocating resources to license content to other platforms.

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Peacock’s Evolving Content Strategy Reflects New Priorities

After significantly increasing its content budget between 2021 and 2023, the Comcast-owned streaming platform is now projected to raise spending at a much slower pace. Peacock will increase its content budget by 12% this year, with the growth rate dropping to just 3% annually by 2026.

This slowing pace means Peacock is expected to spend $5 billion on content this year, up from $4.4 billion in 2023, eventually reaching $5.7 billion by 2028. This outlay is a significant rise from the $1.5 billion spent in 2021 and aligns with Comcast’s earlier goal of spending $5 billion annually on content.

However, the modest growth anticipated in the coming years indicates that Comcast is focusing on improving Peacock’s financial health, considering the service has already incurred $8.5 billion in losses.

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Focus Shifting Away from Originals

A notable trend is the proportion of the budget allocated to original content. Over the next five years, original productions will account for less than 25% of Peacock’s programming expenses, with spending on originals growing by less than 10% annually from 2024 to 2028.

Peacock has never been a significant player in original content creation. At its peak in 2022, it released fewer than 60 original television shows, dropping to under 30 in 2023—the lowest among the eight largest SVOD providers.

Over 75% of Peacock’s $5 billion content budget will be spent on acquired content, including films and shows from Universal, which Peacock licenses under its Pay-1 deal, and content from other studios. For example, all eight Harry Potter films and the hit series Yellowstone are available on Peacock despite being Paramount properties.

A significant portion of the budget will also go towards live sports rights. These expenditures could increase if Comcast secures additional sports rights like the NBA. Peacock has already invested $110 million to stream an exclusive NFL playoff game and plans to continue pursuing sports broadcasts.

As the streaming industry reverts to a cable television model, platforms like Peacock are adapting by becoming comprehensive content hubs rather than focusing solely on original productions. Combining original shows with popular live sports and licensed content could be a successful path for Peacock, especially as it aims to grow beyond its current 34 million subscribers and improve its original content offerings.

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FilmTake Away: Strategic Spending and Decelerating Spending Growth

The post-peak television era presents a complex scenario for content spending. While overall expenses are set to rise modestly, the focus will be on prudent investment in projects that promise broad appeal and cost efficiency. The media industry’s future will depend on finding this delicate balance as it continues to adapt to new economic realities.

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