Media, luxury and education
Content amortization
Spreading the cost of films and shows as an expense over the years they are expected to earn.
Last reviewedWhat does Content amortization mean?
Content amortization is how media companies expense the cost of making or licensing content over time instead of all at once. The cash is spent up front, but the cost reaches the income statement in line with when the content is expected to be watched or earn money, which is usually heaviest in the first year or two. Example: a series costs 100 million; if the company expects 60 percent of its viewing in year one, 30 percent in year two and 10 percent in year three, it books amortization of 60, 30 and 10 million. Because cash goes out before the cost is expensed, a fast-growing streamer can report profits while burning cash, so look at free cash flow too.
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Related terms
- Depreciation and amortizationSpreading the cost of a long-lived asset over its useful life.
- Free cash flowCash from operations minus capital expenditure.
- Capex (capital expenditure)Spending on long-lived assets such as machines and buildings.
- SVOD and AVODStreaming paid for by subscription (SVOD) versus paid for by advertising (AVOD).
- Fill rate (advertising)The share of available ad slots that are actually sold and shown.
- ARPPU (average revenue per paying user)Revenue divided by only the users who pay, not all users.
- Payer conversionThe share of users who pay for something in a period.
- DAU/MAU ratioDaily active users divided by monthly active users: how often people come back.