TBI Tech & Analysis: Tracking US studio streamer spending in 2023

Stranger Things S4

Disney, Warner Bros. Discovery (WBD), NBCUniversal (NBCU) and Paramount all made the decision to fight back against Netflix in the global streaming marketplace, launching their own direct-to-consumer services. Omdia’s Tim Westcott reflects on how the studio fightback is going.

After a mostly impressive start (Disney+ massively surpassing expectations after its launch in 2019, for one), streaming has proved a challenging business for the studios.

As of Q2 2023, all of the studios were still losing money in their direct-to-consumer segments, while Netflix has continued to amass profits, taking pricing changes and a crackdown on account sharing in its stride.

Disney will invest $25.3bn on TV & online programming in 2023, with Disney+ accounting for just over $4bn of the total

Tim Westcott, Omdia

Shareholder unrest brought Bob Iger back to the helm of Disney, setting a target of $5.5bn in cost savings and trimming 7,000 jobs from the payroll. WBD, struggling to bring its debt under control, has also cut costs.

On top of this, the studios have been locked into a strike by both screenwriters (now resolved) and actors (not resolved), many of whose demands are directly opposed to the goal of more profitable streaming.

The strikes have affected Netflix, which is on the same side of the negotiating table as the studios, as well, stalling productions including Big Mouth and Stranger Things.

For all players, the strikes are likely to mean that productions due to start in 2023 will be pushed into next year. This is not all bad news for the studios: WBD CEO David Zaslav was reported saying that the strikes had saved the company $100m.

Despite the high profile of streaming, the US studios are multi-faceted businesses, and their direct-to-consumer divisions are only part of the revenue picture. NBCU was boosted in Q2 by The Super Mario Bros. Movie, while WBD’s Q3 results will bask in the halo effect of Barbie. Disney’s theme parks division has had a strong year, too.

Studios’ streaming spend

In terms of programming expenditure, direct-to-consumer will account for between 16% to 40% of the money spent by the studios in the US this year, according to Omdia’s Digital Content & Channels Intelligence.

Overall, we estimate Disney will invest $25.3bn on TV and online programming in 2023, with Disney+ accounting for just over $4bn of the total. WBD is expected to spend $4.6bn on direct-to-consumer programming (which technically includes the linear HBO channels as well as Max), within $11.6bn overall.

Barbie

NBCU is somewhere in between, with 28% of its overall spend by Peacock, while Paramount+ accounts for 30% of its parent company’s spend.

Again, looking at overall investment, Omdia is expecting to see a slowdown in expenditure by the big US groups in the full year 2023.

Looking at investment in the US only, Disney will increase spending by 2.1% this year, an almost identical year-on-year increase to 2022 versus 2021. Investment on Disney+ will, however, increase by just under 26%.

NBCU will, we expect, invest $11.5bn on US content in 2023, up 7% on the year before, with investment in Peacock up 9%.

WBD will slightly reduce overall spending to $11.6bn, and will cut direct-to-consumer spending by nearly 3%, we expect. Paramount will cut content investment by 6.5% to $8.2bn, although direct-to-consumer spending will increase 4% to $2.5bn.

Netflix’s spending obligations

If we look at spending on online content only, the studios are some way behind Netflix (important to note that we are looking here at P&L spend, not cash spend).

Stranger Things

Omdia estimates that Netflix will spend $8.7bn on US content in 2023. This is only marginally more than its total 2022 spend, and is impacted by the writers’ strike and a continuing increase in investment outside the US (especially key territories like South Korea and the UK).

Amazon is in second place with $5.6bn (note that, unlike Netflix, this includes some live sport). Apple TV+ has moved ahead of Paramount with a forecast $3bn investment on content (again, now including sport).

Any hopes that Netflix might be diminished by the US studios’ D2C moves have certainly not been borne out. The streaming service appears stronger than ever and is still pouring money into funding new content.

As we have said before, Netflix is obliged to do this because it does not have a massive library of film and TV to draw from, unlike the studios (while Amazon has swallowed up MGM).

To find out more about US studio spending on streaming and Omdia’s Digital Content & Channels Intelligence Report, click here.