Content costs media companies 140 billion dollars
The nine largest media and technology companies will spend a record $140.5 billion on content in 2022. Compared to the previous year, this represents a 10 percent increase, according to the U.S. financial services provider Wells Fargo, based on current data. Experts even expect this figure to rise further to $172 billion by 2025.
"The fact that spending in the content sector is increasing is due to the exploding costs that the business in the streaming war brings with it," explains the industry newspaper Variety. Some investors are already worried about the profitability of media companies in light of recent developments. "The shares of all these companies have experienced a boom in 2021. However, Wall Street now seems to be taking a much more skeptical view," says the assessment.
The situation is becoming increasingly difficult, especially for traditional media companies that still have to finance a program for their traditional linear channels in addition to digital on-demand offerings. "They have no choice but to increase their expenditure in order to keep up with the big tech companies. But this squeezes their profit margin," the experts point out. Whether this strategy will work in the long term is questionable, "because there can only be a handful of global players who will support consumers".
From Disney to Warner Bros.
Disney has announced that it will spend almost 33 billion dollars on content in 2022. In the previous year, the figure was 25 billion dollars. Wells Fargo is also forecasting additional expenditure of 22.4 billion dollars for the current year for the competition from Warner Bros. and Discovery, which will soon be merged for good. This corresponds to an increase of 8.2 percent compared to 2021. (pte)
