Streaming Wars Price Tag Continues To Mount

The price of admission for those fighting the streaming wars will continue to escalate, projected to jump 10 percent in 2022 to $140.5 billion for the nine biggest media and technology companies, according to Forbes citing Wells Fargo data.

The figures  are expected to continue rising in coming years too, hitting $172 billion in cash outlays by 2025, Wells Fargo projects. Those spending outlays are driven by competition to attract and keep subscribers, expand programming to reach broader global markets, and provide coverage of sporting events. At stake is primacy in a transformed media business that connects media companies directly with their customers in markets around the planet.

Leading the spending is Disney, which is projected to spend $33 billion in its fiscal year 2022, which started Oct. 1. That prodigious spend includes cash outlays for ABC, ESPN, other legacy cable networks, its movie studio with Marvel and Star Wars, animation operations with Pixar and Disney Animation, and four streaming services (Disney Plus, Hulu, ESPN Plus, and international service Star).

That’s a big jump from the previous fiscal year’s $25 billion, but in fact might not be nearly enough for the Hollywood giant as it tries to maintain its many lucrative legacy operations while providing enough original content to attract and retain subscribers who can easily cancel and sign up with competitors.

In fact, that’s the challenge facing all of the Hollywood media companies as they square off for market relevance against the deep pockets and diverse online video offerings of Netflix and tech giants Apple, Alphabet and Amazon, none of which must feed a legacy film and TV operation alongside new streaming offerings.

Sports broadcasting rights are a substantial part of the overall totals. Their cost has skyrocketed in recent renewal negotiations by networks with the NFL, NHL, NBA, English Premier League and other major European soccer leagues and competitions, and cricket’s Indian Premier League.

The NFL in particular has become vital to the sustained existence of legacy broadcast and pay-TV services, its games comprising 75 of the top 100 highest rated shows on TV last year, according to an analysis by Sportico. Other major sports leagues are also among the most important components of TV’s traditional ecosystem.

The continued cost of competing for eyeballs is starting to weigh down some media companies, which have seen their shares droop in the second half of 2021 and into the new year. Disney, for instance, was down today 21 percent for its one-year high of nearly $202 a share, though it’s up from lows of $142 a share just after Thanksgiving.

Other media companies are seeing notable share declines too, as Wall Street investors have begun looking beyond the subscriber additions reported by media companies to look at other metrics like churn rate, market share and content spend.