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Content Strategy for Some US Over-the-Top Players


Aug. 18 2020, Updated 4:45 a.m. ET

Content strategy for Netflix

We’ve been looking at Alphabet’s (GOOG) YouTube Red’s bid for exclusive content streaming rights. It’s also important to look at the content strategy of major players in the market, including Netflix (NFLX), Hulu, and Amazon Prime Instant Video (AMZN).

Netflix has stated that it’s likely to go into additional debt next year to fund its content acquisition costs. Netflix had gross debt of $2.4 billion at the end of 3Q15.

Netflix expects to spend ~$5 billion on content acquisition in 2016. Currently, 10% of its content spend is on original content. The company would like to raise that to 50%. It believes original content will strengthen its brand and drive up viewing hours.

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According to a Huffington Post report dated July 29, 2015, citing research by Consumer Intelligence Research Partners (or CIRP) as of June 30, 2015, Amazon Prime had about 44 million members. In comparison and as the above graph shows, Netflix had total streaming memberships of 65.5 million in 2Q15 and 69.2 million streaming memberships in 3Q15. In an earnings call at the end of 2Q15, Twenty-First Century Fox (FOXA) stated that Hulu was approaching 10 million memberships.

Hulu content strategy

Hulu is also acquiring original content or exclusive SVOD (subscription video-on-demand) rights. Earlier this year, Hulu acquired exclusive SVOD rights to a variety of programming from Turner Broadcasting (TWX).

In October, Hulu renewed its agreement with Viacom (VIAB). Under the terms of this agreement, Hulu will be an exclusive SVOD platform to carry Viacom’s popular TV shows.

Amazon is making Prime Instant Video bigger and better

Amazon is increasingly focusing on making Amazon Prime Instant Video service bigger and better. In the past few months, Amazon has started offering video downloads for its Prime Instant Video service on iOS and Android platforms. The company also acquired Elemental Technologies and is aggressively pursuing original content.

Alphabet makes up only 1.2% of the iShares S&P 500 Index (IVV). For an investor interested in getting exposure to the banking sector, IVV has an exposure of 6.5% to the sector.


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