Video on Demand (VOD) services have become an integral part of everyday life. Since their emergence, VOD platforms have revolutionized how and when we consume video content. Today, viewers can choose what and when to watch, while platforms fiercely compete for users by investing billions of dollars in acquiring content.
The Rise of VOD Platforms: Impressive Numbers
In 2023, the global VOD industry is valued at $83.3 billion, and by 2028, this figure could exceed $150 billion. Giants like Netflix, Amazon Prime Video, and Disney+ hold leading positions, attracting hundreds of millions of subscribers worldwide. For instance, by mid-2023, Netflix had over 238 million subscribers, and Disney+ boasted more than 146 million.
This rapid growth has been achieved not only by offering existing content but also through aggressive strategies of acquiring rights to new movies and TV shows, often at the pre-production stage.
Acquiring Content Rights: New Trends
Modern VOD platforms not only purchase ready-made films and series but also actively invest in projects at the earliest stages of development. This allows them to secure exclusivity and meet the demands of their viewers, who are looking for high-quality and unique content. Here are some striking examples of content rights acquisitions when VOD platforms made deals at the pre-production stage:
1. Netflix and "Knives Out 2 & 3"
In 2021, Netflix acquired the rights to two upcoming sequels of the popular detective film
Knives Out for a staggering $469 million. The deal was struck before production even began, during the script development phase, making Netflix the exclusive home for the sequels.
2. Amazon Prime Video and "The Lord of the Rings: The Rings of Power"
One of the largest and most ambitious projects of recent years is the TV series based on The Lord of the Rings. Amazon acquired the rights to the franchise back in 2017 for $250 million during the pre-production stage, marking the beginning of a grand project with a total budget exceeding $1 billion.
3. Apple TV+ and "Lessons in Chemistry"
In 2021, Apple TV+ purchased the rights to adapt the book Lessons in Chemistry before its release, while it was still in preparation for publication. The rights to the series, starring Brie Larson, were acquired before filming started.
Why Do VOD Platforms Buy Content in Pre-Production?
1. Exclusivity. Acquiring rights during development allows the platform to secure exclusive access to content that competitors won’t have. This creates a strong incentive for subscribers to stay with or join the platform.
2. Control Over Production. By closing deals early, platforms can influence the final product, ensuring the quality and storyline align with their brand and audience expectations.
3. Minimizing Risk. Buying popular franchises or stories with high expectations allows platforms to reduce risks associated with potential market failures. For example, acquiring the rights to The Lord of the Rings guaranteed Amazon a massive audience right from the start.
Competition Among Platforms: The Battle for Content
With a saturated market, the competition for high-quality content rights is becoming fiercer. Major platforms actively compete for exclusive rights to popular stories and completed products. For example, Netflix won the rights to Knives Out after a fierce bidding war with Apple and Amazon, who also wanted the film.
Sometimes, competition between platforms drives content deal prices to astronomical levels. Disney+ and Netflix engaged in months of negotiations for the streaming rights to future Sony Pictures projects, including Spider-Man films, ultimately concluding with a major deal in Netflix's favor.
The Future of VOD: Betting on Original Content
In recent years, we’ve seen a noticeable shift in platform strategy: instead of merely acquiring ready-made content, more VOD platforms are focusing on producing original shows and movies. In 2022 alone, Netflix spent more than $17 billion on creating its own content. Disney+, with its vast library of franchises like Marvel, Star Wars, and Pixar, continues to develop new projects within these universes, further intensifying competitive pressure on other players.
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