Lily Kholar's blog : Cash Content Spending: What We Can Expect from 2024
What are the predictions for 2024 content spending in the entertainment industry? Surprisingly, experts are still predicting a modest rise from 2023 levels despite the considerable restructuring measures we’ve seen in the industry in recent years. Our expert entertainment lawyer in Los Angeles, Brandon Blake of Blake & Wang P.A., looks deeper into what we can expect in 2024 on the content front.
Brandon Blake
Strike Savings Put to Use
It may be counter-intuitive to think of last year’s extended strike environment as a positive. However, the halted production schedules and reduced programming expenditure of 2023 have also created a cash-positive environment for many companies. As can be expected, most experts predict that these savings will be rolled into cost-cutting and debt-reduction measures as the battle for streaming profitability heats up.
So, the chances of an immediate return to 2022 content-spending levels are slim. The era of spending with abandon, especially on high-production-value, high-cost TV dramas, is most definitely over, and we’ve entered a phase where we can expect to see careful consideration behind any new project being greenlighted. Paramount, for example, is now on record as only wanting to ‘recycle’ 50% of those strike-induced savings back into its content cycle.
However, according to a recent report from MoffettNathanson, we can still look forward to a modest low-single-digit increase in content spending over 2024. Currently, they pin the figure at around 5%. This will go quite a way to offset the 8% drop we saw in 2023, even if it still falls short of 2022 levels.
The New Normal?
Additionally, most experts agree that this rise should work to establish a ‘new normal’ of sorts as we look beyond the 2024 year. A better baseline on spending for the industry and its current state, as it were. The MoffettNathanson report anticipates that the pattern of low single-digit increases will continue over the next few years.
Also worth consideration is what this means for content amortization, or the cost of content over an audience’s viewing lifespan. This will naturally vary between studios, as each has its own strategies to follow and unique needs. The MoffettNathanson report, however, predicts a boost in spending for all streamers bar Warner Bros. Discovery, which is continuing its aggressive cost-cutting measures, and Fox Corp. Netflix is predicted to re-enter the growth cycle, and Amazon and Apple are expected to be the most modest in their streaming content spending approach but continue to chase theatrical releases that require greater investment in the short-term.
Looking at the industry as a whole, spending on scripted content in the U.S. is expected to remain soft, especially as (often cheaper to produce) international dramas rise in streaming prominence. Unscripted reality programming continues on a growth vector, and despite the ‘superhero fatigue’ we are seeing, the power of a strong franchise seems to be maintaining its allure for producers. Sports streaming will also remain a ‘hot’ growth area.
There’s a careful interplay between keeping production costs manageable and losing impetus on subscriber growth and the appeal of content that does get made. As the 2024 production cycle gets into full swing, it will be intriguing to see who finds the sweet spot in this delicate dance, and who gets left behind, as we head towards some inevitable consolidation in the streaming space.
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