News


Netflix content spend outstrips BBC, HBO, Discovery

Netflix Building41-620x413Netflix now outspends the BBC, HBO and Discovery on content, according to new research.

Only Sky spends more and that is driven by its massive investment in sports rights, Ben Keen, chief analyst and VP, consumer media, IHS, told the Cable Congress in Brussels.

Keen said Amazon is also spending significantly on content, outspending for example ProSiebenSat.1 Group.

Marco Polo3He said about 20% of Netflix’s content spend is on original content such as Marco Polo, House of Cards and Orange is the New Black (all pictured), with the balance going on acquired content.

Bundled and standalone OTT video subscriptions will grow massively over the next five years as traditional cable TV subscriptions continue to decline, Keen added.

He told Cable Congress attendees that subscription and ad-funded OTT services are expected to grow significantly, with total online video revenues forecast to surpass US$35 billion by 2018.

In Europe, IHS expects bundled OTT subscriptions to reach close to 30 million by 2019, while standalone subs are likely to add about 40 million, taking the total over 70 million.

While OTT is growing, online video revenues still only amount to US$33 billion, less than the US$273 billion spent on pay TV.

Nevertheless, the cable TV business is under pressure, with TV subscribers declining from 2009. Since 2013, subscriber numbers have started falling in central and eastern Europe as well as western Europe.

House of CardsWithin the overall TV market, cable’s share has fallen from over 70% to just over 40% within a decade, under pressure less from OTT than from IPTV and, in central and eastern Europe in particular, from satellite.

Despite the pressure on TV, cable is still a growth industry, said Keen. “The industry has been transformed by the transition to digital,” he said. Over 70% of European cable TV revenues are now digital, he added, and TV ARPU has continued to go up as a result.

Overall, he said, the cable industry has almost doubled in size over the last decade, adding €12 billion in value. The transition to digital and the success of cable broadband – itself a driver for OTT – mean that cable is still a strong growth industry, Keen said.