Why Ott Content Spending Is Sobering And What's Next

Why Ott Content Spending Is Sobering And What’s Next?

Over the past decade, streaming platforms have been on an unprecedented original content splurge, spending billions annually on movies, shows and acquisitions. However, recent developments suggest OTT content budgets are plateauing amidst economic pressures and maturing competition. What’s causing this sober assessment and how will it impact the future of streaming?

The Era Of Aggressive Ott Content Investment

The advent of streaming triggered aggressive investments in original and licensed content by platforms like Netflix, Amazon Prime and Disney+ to attract subscribers.

Some examples of massive content spending over the years:

  • Netflix spent $17 billion on content in 2021, forecast to grow to $18 billion in 2022.
  • Apple TV+ launched with a $6 billion budget to fund original shows and movies.
  • Amazon Prime Video spends approximately $7 billion annually on content.
  • Disney+ content investment was accelerated to $33 billion by 2024.
  • Warner Bros. Discovery is investing $20 billion in HBO Max and Discovery+ content.

This epic spending was necessary for platforms to build robust, fresh catalogues to differentiate in a competitive market.

Why Ott Content Budgets Are Facing Reassessment

While content investments drove subscriber growth initially, several factors are now forcing more efficient content spending:

  • Subscriber Slowdown: After explosive Covid-led growth, major services like Netflix, Disney+ and Paramount+ are seeing subscriber additions taper off in saturated markets. This reduces revenue headroom for content spending.
  • Rising Inflation: Surging costs due to rising inflation are putting pressure on content budgets. Also forcing households to cut back on paid OTT subscriptions.
  • Ad-based Revenue Pressures: The shift towards ad-supported tiers is further straining revenue per subscriber, necessitating more measured content investments.
  • Maturing Platform Competition: With most major streaming brands already well-established, differentiation is now less about quantity and more about quality of standout content.
  • Content Write-Offs: Platforms regularly write off significant amounts when shows don’t find audience or cultural impact, despite heavy budgets.
  • Tighter Monetary Policies: Rising interest rates to curb inflation are also making cheap capital no longer as easily available to fund streaming content investments.

These interlinked economic factors signal an inflexion point. The era of streaming content spending doubling annually cannot go on perpetually.

Impact Of The Ott Content Budget Realignment

More efficient streaming content investment and allocation will manifest in several ways:

  • Less Low-Priority Projects: Streamers will greenlight fewer new shows of questionable audience appeal just to bulk up catalogues. The focus will sharpen on proven big hits.
  • Ad Support for Smaller Content: Ad revenue will increasingly fund more niche originals unable to justify subscription budget allocation.
  • Shorter Season Orders: Renewals for marginal performers may come with trimmed season episode orders to contain costs.
  • Axing Underperforming Franchises: Lower viewership shows dragging multi-season commitments will get cut rather than get dragged on.
  • Smaller Deals for CREATORS: Overall content budget tightening will see streamers negotiating smaller deals even with top showrunners and studios.
  • Less Extravagant Marketing: Lavish cross-platform marketing campaigns will be more selectively deployed only for proven tentpole franchises.
  • Licensed Reruns: Libraries will lean more on cost-efficient licensed shows instead of solely originals.

Streaming content investments will grow in a more methodical manner aligned with revenue trajectories, taking into account factors such as Zara Hatke Zara Bachke Movie OTT.

Streamers Adapting Content Strategies

Facing economic headwinds, platforms are rethinking content plans to extend ROI:

  • Axing Secondary Brands: Warner Bros. Discovery culled niche services like CNN+ and mature direct-to-video labels to consolidate resources into core HBO Max streaming.
  • Ad Tiers: Ads provide an additional revenue stream to fund content. e.g. Disney+, HBO Max and Netflix launching ad-supported plans.
  • Kids/Family Focus: Platforms like Disney+ and Paramount+ are prioritizing kids/family programming with high repeat viewership.
  • Hub-Spoke Model: HBO Max originals anchor subscriptions; Discovery+ fills niche tastes on the same platform. Reduces content duplication.
  • Licensing Not Owning: Rather than outright own all content, streamers lock select windows e.g. next-day streaming rights. Lowers costs.
  • Studios Aligning Slates: Studios ensure streaming originals and theatrical releases appeal to different segments to maximize viewership.

Despite tailwinds, streamers have levers available to derive more value from content investments as the market evolves.

Future Outlook For Ott Content Spending

Despite current rationalization, streaming content spending will keep growing given massive global subscriber upside remaining. But forecasts have been trimmed compared to earlier bullish estimates. Additionally, the release of “Tiger 3 Movie OTT platform is expected to contribute to this growth.

  • According to Ampere Analysis, global OTT content spending will reach $230 billion in 2027, up from $159 billion in 2022. But lower than the earlier $277 billion estimate.
  • India’s OTT content market is projected to reach ₹160 billion by 2025 per the EY-FICCI report. Down from the earlier ₹210 billion projection.
  • Mature markets like North America will see content spending scaling down to drive profitability.
  • Emerging markets will lead content growth given lower penetration. Regional localization key.
  • Differentiation will be through better content rather than just more content.

In summary, content spending is becoming smarter by aligning investments with realistic subscription forecasts in a maturing, ad-supported streaming landscape.

What Was The Impact Of Covid On Streaming Content Spending?

Pandemic led content spending to balloon with record subscriber growth. Now investment is rationalizing.

Which Companies Spend Most On Ott Content Annually?

Netflix spent $17 billion in 2021. Amazon Prime Video and Apple TV+ spend $7 billion each. Disney+ content budget is approximately $33 billion.

How Is Inflation Impacting Streaming Content Costs?

Surging production costs due to inflationary pressures are directly impacting content budgets at a time when subscriber growth is also slowing.

Will Rising Interest Rates Impact Ott Content Investments?

Yes, higher interest rates will make cheap capital less easily available to fund streaming content investments.

Which Genres Will See Higher Streaming Investment Focus?

Kids/family programming and Ad-supported content expected to attract higher investment focus within tighter budgets.


The streaming content gold rush was destined to mature from an era of seemingly limitless budgets to more deliberate investments governed by subscriber economics. This rationalization is both prudent and necessary in a recessionary environment with several platforms still posting losses.

Rather than a wholesale pullback, the inflection point will find streaming brands focusing investments into proven franchises, fresh formats and strategic content gaps. As consumer behavior evolves, aligning content costs with ad-supported and hybrid subscription models will be imperative. By doing more with less, streamers can extend their content runway till the next catalyst like global expansion or innovation ignites the next phase of strategic growth.