Netflix, Hulu and Amazon Prime Video are expected to triple their combined investments in originals by 2022, spending $10 billion annually, according to The Diffusion Group.
"The Big-3 SVOD players own 60% of TV streaming time," said Brad Schlachter, TDG senior adviser and author of the report. "They are looking to grow this share by creating compelling originals that serve both to attract new users and retain existing subscribers even as subscription rates increase."
TDG gathered some data from SVOD subscribers in order to gauge how important original content is when deciding whether to stick with a service. Fully 21% of Netflix subscribers said originals are "absolutely critical" in their decision to keep using Netflix, and 41% called them "very important." About 14% said originals were of no importance.
This year, Netflix plans to spend $7.5 billion to $8 billion on content. Though it’s not completely clear how much of that budget is earmarked for original series and films, Netflix clearly has been one of the most aggressive companies in buying original content.
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Last year, Amazon reportedly spent $4.5 billion on content and Hulu spent around $2.5 billion. While Hulu’s pursuit of original series hasn’t been nearly as all-encompassing as Netflix’s, Hulu has been able to generate significant buzz with series that won awards and the prestige that goes along with it.
"Of course, not all originals find an audience or generate a huge buzz," said Schlachter. "But when they do, it can change the fortunes of a company. Just look what ‘The Handmaid's Tale’ did for Hulu, or what ‘House of Cards’ did for Netflix."
TDG sees originals continuing to gain significance for SVODs as studios like Disney pull their content from SVOD libraries. But companies including Facebook and Apple are emerging as competitors and investing in original TV-quality programming.