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TDG: ‘Big three’ SVOD players to plough annual $10bn into originals

transparent-season-2-photoThe ‘big three’ SVOD players – Amazon, Netflix and Hulu – will triple the amount they invest in originals to US$10 billion annually by 2022, according to The Diffusion Group (TDG).

The forecast is good news for customers, with many polled in the TDG research pointing to original content as they key reason they subscribe.

The ‘Big-Three SVOD and the Original Content Arms Race’ report claims found that 21% of polled Netflix subscribers said its originals were “absolutely critical” and another 40.7% said this content was “very important” for keeping the service.

A further 24.4% said originals were “somewhat important” in keeping them locked into the service, while just 14% said Netflix’s originals were “of no importance”.

TDG said that much like HBO decades ago, the big three US subscription video-on-demand providers now have a much better understanding of the limits of licensed content and the benefits of a slate of originals.

“The big three SVOD players own 60% of TV streaming time,” said Brad Schlachter, TDG senior advisor and author of the new report.

“They are looking to grow this share by creating compelling originals that serve both to attract new users and retain existing subscribers even as subscription rates increase.”

“Of course, not all originals find an audience or generate a huge buzz, but when they do, it can change the fortunes of a company. Just look what The Handmaid’s Tale did for Hulu, or what House of Cards did for Netflix.”

In its Q4 earnings announcement last week Netflix said that it plans to spend US$7.5 million-US$8 billion on content overall on a P&L basis in 2018.