The Madness of Streamers overspending on Mega-Budget Films

Streaming giants like Netflix, Apple TV+ and Amazon Prime Video have been pouring astronomical sums of money into single blockbuster-style films for their platforms. Movies like Netflix’s The Electric State ($320M), Heart of Stone ($200M) and Apple’s Wolves ($200M) raise an important question: why are these companies willing to invest such immense budgets into standalone films when they could be making five to ten times as many mid-budget films ($5M–$50M) with better storytelling, deeper character development and still featuring top-tier talent?

This blog explores the motivations behind this spending strategy, the potential missed opportunities, and whether streamers should shift their approach to maximise both content quality and long-term profitability while positively impacting the film industry.

The Current Strategy: Betting Big on Tentpoles

The traditional Hollywood model of tentpole filmmaking — where studios invest heavily in big-budget blockbusters — has clearly been adopted by streamers. The idea is simple: a high-profile, expensive film featuring A-list talent generates buzz, drives subscriptions and keeps platforms competitive in an increasingly fragmented streaming landscape.

For streamers, these films serve as both marketing tools and retention drivers. High-budget spectacles can capture global audiences in a way that smaller films might struggle to achieve. However, the real question is: does this approach actually work in the long term, or is it an unsustainable strategy?

Why Streamers Prefer Big-Budget Films

1. Subscriber Growth and Retention

Big-budget films attract headlines. When Netflix announces a $320M movie directed by the Russo Brothers (The Electric State), it commands attention and generates discussion. The goal is to make subscribers feel like they’re getting exclusive, high-quality content they can’t get anywhere else. Streamers hope these investments will not only bring in new users but also reduce churn — the rate at which subscribers cancel their service.

2. Competing with Theatrical Blockbusters

With traditional studios still dominating the theatrical landscape, streamers see big-budget productions as a way to rival Hollywood’s biggest franchises. If a streaming service can offer a film as grand as a Mission: Impossible or Avatar sequel without requiring audiences to leave their homes, they believe it can be a major draw.

3. Star Power and Prestige

A $200M film starring Chris Hemsworth, Gal Gadot, or Leonardo DiCaprio carries immense prestige. Streamers want to be seen as the new Hollywood, capable of producing films that rival (or surpass) traditional studios. High budgets allow them to attract A-list directors and actors who bring credibility and audience interest.

The Case for Mid-Budget Films

While the reasoning behind mega-budget films makes sense, the downside is clear: they’re incredibly risky. If a $200M film flops, there’s no theatrical box office to cushion the blow and it disappears into a digital library with no ability to recoup costs in the same way as traditional studio releases.

Investing in mid-budget films instead could provide streamers with:

1. More Diverse and Engaging Content

A single $200M film could be split into ten high-quality films in the $5M–$50M range. These films could tell richer, more varied stories, attracting audiences that crave more than just spectacle. Mid-budget films have historically given us some of the most memorable and critically acclaimed movies (Fight Club, Good Will Hunting, The Departed, Mad Max: Fury Road), all of which were made for significantly less than today’s blockbuster budgets.

2. Lower Risk, Higher Reward

If a streamer funds ten mid-budget films instead of one mega-film, even if a couple underperform, others are likely to find success. Diversification is a safer bet. If just one out of ten becomes a breakout hit, it can justify the entire strategy while still allowing room for experimental storytelling.

3. Greater Longevity, Library Value, and Stock Growth

A vast library of mid-budget films increases the long-term value of a streaming service. Unlike big-budget films, which often rely on spectacle and lose relevance quickly, strong mid-budget films with great characters and storytelling tend to have better longevity. More quality films mean a more extensive, high-value library that enhances a company's overall valuation and stock performance.

4. Job Creation and Industry Growth

The $5M–$50M price point enables the production of more films, which in turn generates more jobs across the industry. Writers, directors, actors, crew members and post-production teams all benefit from increased output. Instead of funnelling $200M into a single project, producing multiple films in this budget range fosters a healthier, more vibrant industry ecosystem.

5. Still Attracts High-Quality Talent

Contrary to the belief that only massive budgets can secure A-list talent, many high-profile actors and directors are drawn to mid-budget projects that offer creative freedom. Steven Soderbergh’s Black Bag is a prime example — a high-quality film made within a reasonable budget that still attracts top-tier talent. The prestige and storytelling opportunities of well-crafted mid-budget films often outweigh the lure of mega-budget spectacle.

Why Aren’t Streamers Taking the Mid-Budget Route?

Despite the clear advantages of mid-budget films, most streamers remain committed to the big-budget strategy. Several factors contribute to this:

1. Marketing and Branding

Mega-budget films serve as a statement of dominance. Streamers want to be associated with the biggest, most expensive productions to stay ahead of competitors. Even if a $50M film is objectively better, it won’t make the same headlines as a $200M blockbuster starring major celebrities.

2. Data-Driven Decision Making

Streaming platforms rely heavily on algorithms and data analytics to determine what to fund. If data suggests that spectacle-driven content leads to higher engagement and longer watch times, they will continue to prioritise those investments — even if it means fewer total films.

3. The Prestige Factor

Just as traditional studios chase Oscars, streamers want their own version of prestige: massive-scale productions that reshape industry expectations. These big-budget films serve as flagships, even if they don’t always yield the best return on investment.

A Realistic Path Forward

A more sustainable strategy might involve:

Allocating budgets wisely: Instead of spending $300M on one film, streamers could split it into two major films at $100M each and allocate the remaining $100M across five $20M films.

Prioritising quality over spectacle: Investing in well-written scripts, strong character development, and compelling storytelling will keep subscribers engaged far longer than a visually stunning yet shallow blockbuster.

Taking advantage of existing IP intelligently: Instead of spending on original blockbusters with uncertain appeal, streamers could fund smaller-budget films based on beloved IPs or adaptations with built-in audiences.

Conclusion: A Smarter Future for Streaming and Film

By focusing more on mid-budget films, streamers could unlock greater storytelling potential, reduce financial risk and build libraries that stand the test of time. This strategy not only benefits the platforms themselves but also strengthens the film industry by creating more jobs and ensuring a steady pipeline of high-quality content. While big-budget spectacles will always have their place, a recalibrated approach could ensure long-term sustainability for both streamers and filmmakers alike.

The real question is: will they realise this before the streaming bubble bursts?