Kate Bulkley, Media Analyst.

Production is booming – but it might not be permanent

By Kate Bulkley

Broadcast News

Share |

For Broadcast January 27, 2022

Beyond 2022, there are questions about whether high spending can be sustained, and which streamers will survive, says Kate Bulkley

Kate Bulkley

The projected spending by the big streamers on content is startling, and plenty of production companies will be energised by the prospect of winning business from them in 2022 – but the picture isn’t as clear as it might be.

ITV certainly aims to be on the front foot when it comes to working with streamers. At its investor presentation in December, it said the ITV Studios division is targeting 25% of its revenue from streamers by 2026, up from 6% in 2019.

Of course, following the money makes a lot of sense: the top eight media groups – including Disney, Netflix and Amazon Prime – are planning to spend at least $115bn (£84bn) on new movies and TV shows in 2022 alone, and much of what they want is scripted drama and shows for streaming services.

But even big players like Disney are starting to feel the streaming heat. Its investment in streaming content is forecast by Morgan Stanley to grow by 35% to 40% of overall content spend in 2022 – an expected $23bn (£17bn).

Yet the stock market seems uncertain that all that money will translate to a better bottom line for the Mouse House, principally because subscriber growth at Disney+, as well other streamers including Netflix, slowed in the last months of 2021.

“Competition for subscribers is getting more intense and the concern is whether the pandemic bump in demand for video content will continue”

Disney has been the poster child for the strategy of taking a little bottom-line pain now for big, longer-term rewards. But while Wall Street gave Disney the benefit of the doubt when it pivoted to streaming a few years ago, times may have changed.


Competition for subscribers is getting more intense and the concern is whether the pandemic bump in demand for video content will continue and, if so, which services will ‘win’ the subscription wars.


For the moment, the TV and film production sector in the UK – and all over the world – is the beneficiary of lots of money being spent on content. According to one big UK indie, making programmes for the streamers who want global rights can offer a healthy production margin despite the loss of secondary exploitation revenue.

If the show is a format and the producer is making all the foreign versions of the show, that’s even better. For scripted shows, streamers will typically pay a premium on future series, which effectively reimburses the indie for the ‘lost’ secondary exploitation revenue.

But that’s not the whole story. The production margin on an individual show is only one part of running an indie, where development and staff costs must also be covered. The latter has been even more expensive in the past 18 months as staff and talent struggled with pandemic production protocols and new ways of working.

“The risk profile changed during the pandemic,” All3Media chief executive Jane Turton said recently. “There were bigger risks than ever before – could we reliably send people on location? How do we shoot a show like Gogglebox (pictured above)? How do we edit remotely? The way people have to work has changed as well as people’s attitude towards work.”

In all of this, margins take a hit. According to one production exec, drama is particularly vulnerable. Scripted drama has higher Covid protocol costs, and the cost of the UK government restart scheme insurance premiums has increased from 1% to 2.5% of a show’s budget.

Given these moving parts, the production boom is perhaps not quite as rock solid as its first seemed. The demand for original content is huge at the moment, but beyond 2022, there have to be questions. Not all the streamers will survive. There will be more consolidation and more efforts by the platforms to make the streaming business profitable.

As these trends take hold, content budgets and overall spend on content will likely take a hit. For now, the sun is shining on production, but there could be clouds on the horizon.

Column Menu

Home