Content Spending Levels at Top Entertainment Companies: 2021 Projections

Yinchen Niu/Variety Intelligence Platform

Disney’s aggressive push to get to the top of the streaming game in 2021 will help tip the company’s content spend for the year over $30 billion, a figure far higher than that of its major media and tech competitors.  

That’s according to a new analyst note published last week by Wells Fargo, which estimates that Disney’s Direct to Consumer and International segment will spend roughly $13.2 billion on programming and production in 2021. Spending on sports rights and content for Disney’s media networks segment will push the company’s total content spend for this year to $30.5 billion.  

Wells Fargo sees NBCU, Netflix and WarnerMedia as the companies that will most closely trail Disney in 2021 content budget and spend, respectively, $18 billion, $17.4 billion and $16.7 billion during the year on content. Wells Fargo estimates about $677 million of NBCU’s $18 billion content expense will go toward Peacock, while that figure is $1.8 billion for HBO Max.  

Wells Fargo based some of its spend estimates on amortization, but all content spend estimates in its note are apples to apples on an estimated cash basis. 

The figures above highlight how costly it is to have a robust streaming originals pipeline in 2021. 

They also provide another indication of how aggressively Netflix spends to stay atop the video streaming market. Netflix's estimated 2021 cash content spend figure is in the same ballpark as that of NBCU and WarnerMedia without any expense on sports rights.  

That’s no small feat considering Wells Fargo estimates NBCU and WarnerMedia will spend $4.5 billion and $2.8 billion this year on sports rights, respectively. Some of that expense for NBCU is currently going toward Sunday night NFL games, which costs the company over $2 billion a year. WarnerMedia pays hundreds of millions annually for NHL and MLB rights. 

Netflix has long made it clear it doesn’t plan on wading into this territory. The company has instead increasingly devoted more effort into filling its catalog with original TV series and movies over licensed content. 

Netflix will release at least 70 original movies in 2021. And that could help the streamer’s subscriber growth given roughly 37% of respondents in a May 2021 survey by Maru Group said they had previously signed up to an SVOD to watch a specific show or movie.

Disney is no stranger in spending to secure event TV series and movies to drive sign-ups. “Hamilton” and “Mulan” premiered exclusively on Disney+ in 2020, though the former film was initially free of charge and much more successful at driving sign-ups, according to analytics firm Antenna. 

Disney spending in the year ahead might go toward additional expenses associated with big upcoming films set to skip theaters for Disney+, like “Pinocchio” featuring Tom Hanks and “Peter Pan & Wendy” featuring Jude Law. 

Considerable Disney spend in the future will go toward sports rights.  

The company will lay out roughly $7.5 billion on sports rights in 2021 and $43 billion on these rights from 2021 to 2025, Wells Fargo estimates. That expense, which includes the reported annual $175 million expense ESPN is incurring for La Liga rights, ultimately helps make ESPN+ more attractive. 

And ESPN+ becoming more attractive increases the attractiveness of the Disney+ bundle that includes the ESPN streaming service and Hulu. Disney doesn’t make it clear how many of its DTC subs are on a bundle plan, but Antenna data from April suggests many U.S. consumers only have access to ESPN+ because it is available in a bundled deal. 

This helps explain why companies feel increasingly pressured to scale up in order to succeed in the current video streaming environment. WarnerMedia and Discovery’s merger is expected to close in mid-2022, and by 2024 Wells Fargo predicts Warner Bros. Discovery (the name of the merged entity) could be the second biggest content spender behind Disney if companies such as Comcast, ViacomCBS or Sony (which didn’t have its spending levels for years prior to 2024 tracked by Wells Fargo) don’t merge with competitors. 

Amazon didn’t specify when it would complete its acquisition of MGM, but Wells Fargo predicts the combined entity will have a higher content budget than Apple in 2024.  

Speculation is always rampant that Apple will make a big acquisition to get ahead in the video streaming market (remember Apple supposedly pursuing Netflix in 2018?), but it doesn't seem certain, at least for now, that Apple will scoop up a studio like Amazon just did.