As basic cable original series prove to be important product differentiators for over-the-top services like Netflix, some of the networks that produce these shows are actually relying more on high-priced theatrical movie acquisitions to maintain or increase their subscriber counts and drive ad revenue.
So says a report released Tuesday by IHS Screen Digest, which justifies the $20 million-and-above payments currently being made by cable channels like News Corp.’s (s NEWS) FX to license blockbuster film titles.
For its part, FX is the resident spendthrift of the cable spectrum, paying top dollar, for example, to secure first TV window rights for current summer titles like Prometheus, Snow White and the Huntsman, The Dictator, Battleship and Madagascar 3 before they even exited theaters. Of the 50 highest-grossing movies of 2011, FX bought first-free-TV-window rights to 28 of them.
Also read: For Netflix users, “catching up” has a catch
And while the network’s brand has been increasingly tied to original series like Sons of Anarchy and It’s Always Sunny in Philadelphia, 57 percent of FX’s air time is consumed by movies, IHS notes, and that’s driving its growth.
Now accounting for 20 percent of the revenue taken in by News Corp.’s cable empire, FX has seen income grow from just $279.7 million in 2006 to $460.7 million in 2011.
“When you look at the ramp-up of ad revenue for FX, as they’ve increased their movie content, they’ve also increased their ad revenue,” Erik Brannon, the IHS analyst who prepared the report, told paidContent.
Among networks not devoted full-time to movies (a la Fox Movie Channel), AMC also ranks high for movie reliance. While the network is known for original-series hits like Mad Men, Breaking Bad and The Walking Dead — now staples in the Netflix streaming lineup — nearly 80 percent of its air time is filled with movies.