Global film and TV production spend rose by 16% to $220bn in 2020, despite Covid

Global spend on producing and licensing new entertainment content rose by 16.4% in 2020 to $220.2bn and is expected to increase to $250bn for 2021, according to research from Purely Streamonomics.

These impressive and surprising figures come off the back of a difficult year for many countries with hundreds of productions put on hold or cancelled due to the spread of Covid-19.

The research from Purely Streamonomics, the research arm of Purely Capital, shows that production spend from companies based in North America is up 16.1%, in line with the overall figure. European company spend, which is currently less than a quarter of that in the US and Canada, rose by 11.8%. This figure is also expected to rise in Europe as local streamers such as Viaplay in the Nordics and Movistar+ in Spain expand their offering.

Dramatic uplifts can also be seen from regional business spend in the smaller markets of Africa and the Middle East (+46.3%), Latin America (+32.9%) and Oceania (+32.5%), fuelled by rapidly growing local streamers such as Shahid VIP in the Middle East, which has recently committed to spending an additional $100m per year on original content.

The planet’s biggest single spender on content remains The Walt Disney Company with a grossed-up total of $28.6bn for 2020 – which is more than the spend across the whole of Asia ($27.7bn) last year.

The recent announcement that Warner Media and Discovery are being combined into a unified media empire whose content spending totalled $20.8bn means that Netflix has now been pushed into third place on the Hollywood spending charts with its $15.1bn outlay last year.

Once Amazon completes its own acquisition of MGM, that combined entity would rank as the fourth largest North American production force with a content spend of $11.8bn.

On that basis these top four companies alone, with combined spending of $76.3bn, almost equate to the entire worldwide spending outside of North America ($77.3bn).

But the research shows indies are also increasing spending on content, which jumped by 25.3% year-on-year in 2020 and now accounts for 65.5% of the world’s film and TV production activity.

The research also showed that, in the US, average budgets across all new series – scripted, unscripted, daytime and kids – was on the rise, up 16.5% in 2020.

In TV and film, this budget inflation has largely been created by three main factors: first streamers and producers are fighting for talent exclusivity, especially with regard to contracting top names and locking them in for future seasons of a show.

Second, production costs have had to rise in order to deliver lavish and impactful shows that stand-out in the marketplace and act as subscription drivers to a platform, such as Disney+’s The Mandalorian and Wandavision.

Third, the cost of introducing and monitoring COVID protocols in 2020 added 20%-30% to production budgets. These costs look to set to remain in place in the immediate term, and the introduction of “green production initiatives” could see a further 5%-10% added over time.

The Streamonomics report consists of primary research, including scraping from forensic research of financial reports filed over the last year with the US Securities & Exchange Commission (SEC).

Purely Capital’s founder and CEO, Wayne Marc Godfrey, comments: “What is remarkable about these record numbers is that the industry’s spending has yet to bump up against any natural ceiling. Streaming is not just displacing traditional sources of entertainment revenue such as pay-TV and linear broadcasting, it is actually expanding the global marketplace for video.

“Our research also shows that the time has come for indie producers to take to the streamers their biggest and best ideas – whether scripted or unscripted. The streamers are also co-producing and acquiring more ready-made content than ever before too – so it’s no longer just about producing an ‘Original’ for them.”

See full infographic of the report findings here.