The merger of Disney-Fox and Comsat-Sky will be jointly accounting for the 20% of the total spent on content worldwide. A report has revealed that out of the $10 spent on content across the globe, these two companies will contribute two dollars by the end of this year.
The position is much more stronger in the US market where the two entities jointly controlled 37% of the total spent on content. Fox-Disney as the lead partner accounted for 23% and Comsat-Sky contributed 14%.
The report has projected the combined Disney-Fox and Comsat-Sky spent in 2018 at $43 billion – Disney-Fox account for $22 billion on content creation and acquisition while Comsat-Sky contribution is closer to $21 billion. The aggregate $43 billion surpassed the combined outlay of the next 10, including OTT platforms Netflix and Amazon – highest content spenders in the USA.
“To some extent, the increasing level of consolidation is a reaction to the growing power of online video platforms. Companies such as Netflix and Amazon continue to invest significantly in content, a trend which shows no signs of abating. We expect Netflix to spend over $8bn on a P&L basis by the end of 2018, and the streaming giant has repeatedly stated it will continue to boost its content budget. Prior to the recent mergers, Netflix was on course to catch – and overtake – the top Hollywood studios by content spend. However, in light of the two new combined entities, Netflix would now need to triple spend to achieve this feat,” says Ampere Analysis analyst Daniel Gadher.
“Prior to the recent mergers, Netflix was on course to catch – and overtake – the top Hollywood studios by content spend. However, in light of the two new combined entities, Netflix would now need to triple spend to achieve this this feat.”
Disney-Fox and Comsat-Sky possess massive content. The control over 20% of the global content market and strong archives put the new joint entity in a position of monopoly to control the market. Disney has already hinted about discontinue the content supply to Netflix to boost its own direct-to-consumer offerings. The strong financial muscle will also empower the new entity to deal with the threat from the rising strength of online video.
“One implication of this consolidation is the effect on independent producers. With a shrinking number of content acquirers in the market, the competition for rights will diminish, and this will inevitably impact the indie sector’s ability to negotiate favorable deals,” adds Gadher.
Ampere also sounded a note of caution over the implications of such consolidations on independent producers. “With a shrinking number of content acquirers in the market, the competition for rights will diminish,” said Gadher. “This will inevitably impact the indie sector’s ability to negotiate favorable deals.”, two in every 10 dollars spent on content worldwide will now be spent by these two entities. In the US the proportion is much more significant – nearly four in 10 content dollars.