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Netflix, Amazon Prime, Hulu Will Triple Original Content Budgets

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Netflix, Amazon Prime, and Hulu will allocate more of their programming budgets to originals and less to licensed content, says a report from TDG Research. The three leading subscription video-on-demand (SVOD) services—which TDG dubs "the Big-3"—will spend a combined $10 billion annually on originals by 2022, tripling their current spend.

"The Big-3 SVOD players own 60 percent of TV streaming time," says Brad Schlachter, a senior advisor with TDG and the report's author. "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."

To find out if this level of spending is justified, TDG surveyed 1,347 Netflix subscribers and asked how important original content was in their decision to keep the service. It found 21 percent said absolutely critical, 40.7 percent said very important, and 24.4 percent said somewhat important. Only 14 percent said Netflix originals were of no importance to their decision. Schlacthter notes that the importance of original content varies for each service.

While not all original features go on to become national obsessions, enough do that they can change the outlook for a service. Schlachter points out that House of Cards was hugely important for Netflix, and The Handmaid's Tale was just as crucial for Hulu.

As studios such as Disney pull their licensed content off subscription services, look for originals to become even more important. TDG's report "Big-3 SVOD and the Original Content Arms Race—Analysis and Forecasts" is available for purchase.

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