Maffei Sounds Warning on Spiraling Content Costs

Liberty Media CEO warns even Netflix might find competition unsustainable
Author:
Publish date:

Netflix may be at the top of the video food chain at the moment, but Liberty Media CEO Greg Maffei warned that the subscription video-on-demand pioneer has created an environment of ever-increasing content budgets that may not be sustainable for long.

Maffei has been skeptical of the enormous amounts of money being spent to produce content. Not just Netflix but Amazon, Apple, Google and Facebook all are spending heavily.

“There was a time when traditional media was a great business,” Maffei said at Liberty’s Investor Day meeting Nov. 14. “But those times are changing.”

Maffei pointed to a prediction by CBS Corp. chief creative officer and Showtime Networks chairman and CEO David Nevins that total industry original content spend will reach $100 billion in the next two years.

“How will that earn a return?” Maffei asked. “How is that going to be justified?”

Apple's "Carpool Karaoke"

"Carpool Karaoke"

He answered his own question by saying the big tech players like Amazon and Apple who are dipping their toes in the content business don’t have to rely on their media businesses to support that investment.

“If you’re a new entrant with a new business model, you can have success defined in other ways,” Maffei said. “You can monetize outside of the traditional parameters of the media business.”

Apple, he said, could afford to spend as much as $20 million on a single 30-minute episode of Carpool Karaoke simply by selling more devices. And Amazon’s 100 million Prime members help it justify a “mind-blowing” media budget he estimated at as much as $12 billion.

Maffei said even Netflix might find it hard to compete with seemingly endlessly deep-pocketed competition.

Related