I doubt many of you tuned in to the Golden Globe awards this past weekend. For those unfamiliar with my homeland’s love of red carpets and celebrity adulation, the Golden Globes are like the drunk, less formal little brother to the Oscars. Unlike the Academy Awards, the Globes award both television and movies, the former being the relevant topic to this post.
This year’s show saw forty one combined nominations in the major TV categories (supporting, actor, actress and show for each of the comedy and drama genres). Notwithstanding the massive caveat that the Globes can hardly be labeled an accurate judge of quality, online subscription video platforms (SVODs) like Netflix and Amazon were responsible for fourteen of those nominations. That is up from exactly zero as recently as three years ago. The five free-to-air broadcast networks accounted for only nine nominations, down from fifteen three years ago. What gives?
Analysts estimate that Netflix spent around US$500m on original content last year. That is roughly half of the amount that HBO, long the beacon of high quality television, spends annually. Not bad for a Johnny-come-lately. But here is where things get interesting. Netflix is projecting to spend more than US$5bn on content during 2016. That is a catchall that includes licensing fees paid for older film and TV content produced by other networks and movie studios. Ultimately, however, it aims for half of that outlay to be on original content like House of Cards and Orange is the New Black. That would be 2.5-3 times the amount that HBO spends. Three times! And, like HBO, Netflix is unencumbered by FCC decency standards—bring on the sex and profanity.
But it doesn’t stop with Netflix. Throw in Hulu and online behemoth Amazon, who are both looking to spend over $1BN on original content, and where do you think the quality programming is going to come from in the future? Given the growth that Netflix and Amazon are likely to see over the next few years, they should eventually be able to spend multiples more than the rest of the traditional cable powerhouses combined (I’m excluding the free-to-air broadcasters). Don’t be surprised if sometime in the next few years virtually all of the Globe nominations will come from the SVODs.
I’ll leave it to you to work out what that means for traditional television providers.
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