The original programming budget of Amazon and Netflix is bigger than that of CBS, HBO, and Turner.
What does this mean for traditional network and pay TV viewership? Let's just say that it doesn't bode well for many of the legacy TV and cable networks.
Netflix and Amazon more than doubled the capital they invested in developing original TV programming annually between 2013 and 2015, according to IHS Technology’s forthcoming ¨World TV Production Report 2016.¨ Amazon’s jumped from $1.22 billion to $2.67 billion, while Netflix’s rose from $2.38 billion to $4.91 billion.There are a number of reasons we're seeing the ascendancy of Over-The-Top (OTT) Internet streaming video services, probably the biggest being that they cost a heck of a lot less than traditional pay TV. Another: viewers can watch when they want to and binge watch an entire season of programming should they choose to do so. The old linear TV programming model has been broken for a while, but the traditional programmers are only now beginning to realize that services like Amazon, Netflix, and Hulu, just to name a few, are stealing away viewers and with it, revenues.
“The levels of investment we are seeing from Netflix and Amazon are only topped by Disney ($11.84 billion) and NBC ($10.27 billion),” IHS Technology Senior Principal Analyst Jim Westcott was quoted in a press release.
Frankly, it's long overdue and it's about time the linear TV programmers realize it. Otherwise, they won't survive, nor should they.