Global spending on producing and licensing entertainment content jumped more than 16 percent to $220 billion in 2020 despite the industry’s shutdown because of the COVID-19 Pandemic, according to research published by fintech platform Purely Capital. Next year, TV and movie producers are expected to shell out $250 billion.
The Walt Disney Company was the largest spender with a grossed-up total of $28.6 billion for 2020 in North America. Warner Media and Discovery, which are being combined in a multi-billion dollar merger announced in May, spent $20.8 billion last year. Netflix ranked third with $15.1 billion in spending. Amazon.com announced in May that it would buy film and TV studio MGM for $8.45 billion. The companies combined 2020 spending was $11.8 billion. The total spending for the four companies totaled $76.3 billion, near worldwide spending outside of North America. Other big spenders include Fox ($11.3 billion), Comcast ($9 billion), and ViacomCBS ($7.5 billion), Purely said.
“What is remarkable about these record numbers is that the industry’s spending has yet to bump up against any natural ceiling,” said Purely Capital’s founder and CEO, Wayne Marc Godfrey, in a press release. “Streaming is not just displacing traditional sources of entertainment revenue such as pay-TV and linear broadcasting. It is actually expanding the global marketplace for video.
The average cost of a U.S. TV series rose from $59.6 million in 2020. Several high-profile shows on Disney+, Apple+, and Prime Video are pricier. Wandavision, The Falcon and The Winter Soldier, The Lord of the Rings, and Masters of the Air each cost more than $20 million an episode. The Mandalorian came in at $16.3 millon.
According to Purely, the reasons behind the increases are many. First, talent costs are on the rise, especially when it comes to locking them in for future seasons of a show. Production costs are also surging as content creators try to create content that stands out from the competition and drives subscribers to platforms.
COVID protocols added 20 percent to 30 percent to production budgets in 2020, Purely says. Hollywood is still recovering from the impact of the worst global health crisis in more than a century. The Los Angeles Times recently noted that nearly 300,000 California jobs were lost in creative industries in California because of the Pandemic.
“Although productions were allowed to resume last summer — a controversial decision in light of the ban on outdoor dining and other activities — filmmakers faced mounting costs and lost insurance coverage,” the paper said.
Independent content producers who operate outside the studio system are also stepping up. Purely estimates that indie content spending jumped more than 25 percent year-over-year in 2020 to $144.3 billion. It now accounts for nearly 66 percent of the world’s film and TV production activity.
“Our research also shows that the time has come for indie producers to take to the streamers their biggest and best ideas – whether scripted or unscripted,” Godfrey said. “ The streamers are also co-producing and acquiring more ready-made content than ever before too – so it’s no longer just about producing an ‘Original’ for them.” Forbes