YouTube and Netflix look poised to keep gold and silver medals in streaming wars as AI overturns Hollywood and allows for more personalized content and supercharged recommendations.
But Amazon Prime Video is good for bronze, if not even better on the podium.
According to a July 10th memo chart by media analysts at Morgan Stanley, Amazon could potentially save the most in the industry at programming costs this year.
Morgan Stanley
Their estimates are based on saving about 10% of the production costs of the Mammoth programming budget scripts original. This means that in 2025, the Morgan Stanley project will reach $24 billion.
However, a large portion of that budget Licensed movies and shows make up a large part of Prime Video's library, and are therefore spent on content that already exists. The small slices are heading towards Amazon's steadily expanding sports portfolio.
AI could ultimately cut scripted television and films by 30%, writes Ben Swinburne, who led a team of analysts at Morgan Stanley. Even in that best-case scenario, he said that studios may not be able to save more than 10% in total programming costs, assuming new shows or films are 50% to 60% of the cost.
The media giant will probably spend a lot of money on AI tools, but Morgan Stanley believes the investment will soon pay for itself.
“Utilizing GEN AI tools is not free,” writes Swinburne. “Technology adoption can result in investment costs from licensing technology or developing an internal productivity tool. However, the net effect can be a reduction in production costs.”
Sports costs continue to climb
Hollywood has the advantage when it comes to AI and for good reasons. A studio cost saving means that you have less money in someone's pocket, whether it's an animator, graphic designer or voice actor.
However, AI companies and high-tech masters He is not the only winner in this brave new world.
Related Stories
Business Insider tells the innovative stories you want to know
Business Insider tells the innovative stories you want to know
Morgan Stanley believes sports rights will continue to grow in value despite the steadily erosion of Pay-TV bundles. Unlike films and TV shows, live games appear to be generative AI proof, so sports rights trading has already increased by 10% per year, potentially from a third to a third of industry-wide spending.
When media companies use AI to save money on scripted content, they could generate more financial firepower and further strengthen the war on bids for live sports rights.
“We expect a large portion of savings reinvested elsewhere in the value chain, including marketing, talent costs, and sports rights,” Swinburne writes. “Sports rights already benefit from budget shifts from television and film.”
The rights costs for ballooning sports are particularly painful for Fox, NBC-Parent Comcast, and Disney, which has the heaviest sports exposure as a percentage of their programming budget.
Morgan Stanley
In contrast, tech giants like Netflix, YouTube, Amazon and Apple have placed their share of Lion's content budgets elsewhere despite increasing investment in sports.
So, if AI reduces scripted content costs and the value of sports rights skyrockets, these deep vandals could become even richer, as Morgan Stanley expects.
