Netflix to spend $12-13b on content this year - more than any other studio

09 Jul 2018 | Rasmus Larsen |

In late 2017, Netflix predicted that it would spend $7-8 billion on content this year but the actual amount will likely be $12-13 billion, according to The Economist. This is more than any other studio.

Netflix in 2018: 82 movies, 700 programs

Netflix is booming as subscriber growth is accelerating. The company will spend $12-13 billion dollars on content this year alone, according to a report by The Economist. Some of the content will be available this year, some of it in coming years.

The company’s investments will allow it to debut more than 80 feature films and 700 new or licensed TV programs this year. To put the number of feature films in perspective, Warner Bros will release 23 in cinemas this year and Disney will release 10, said The Economist. However, the two studios also release several straight-to-home titles so it is not an apples-to-apples comparison.

Still, $12-13 billion is more than any other film or TV studio spends on content annually – sports rights excluded. Netflix currently produces content in 21 countries. Goldman Sachs estimates that Netflix could spend an annual $22.5 billion on content by 2022.

A sizeable portion of the budget will go towards big-budget movies that we would previously have expected to see in the cinema. Those include sequels to Bright with Will Smith, Six Underground ($150m budget) with Ryan Reynolds and directed by Michael Bay, and The Irishman ($125-140m budget) with Scorsese, De Niro, and Al Pacino.


Bright


Who will challenge Netflix?

Netflix is no longer a challenger in the home entertainment space. It is on its way to become the first global TV service and it is taking up billions in debt to finance its aggressive expansion plans. The company hopes to regain that as it grows to reach many more millions.

Netflix currently has 125 million subscribers and more than 300 million viewers.

Amazon is expected to spend more than $4 billion on content this year, the report said. It is currently developing a The Lord of the Rings TV show. Apple and Google are also pouring new money into production of TV shows and movies.

Disney is a major player at the box office with its five blockbuster movies having pulled in over $4 billion worldwide this year. However, that could change in the future. Cinema ticket sales in America and Canada have declined by over 20% between 2002 and 2017, according to The Economist. Disney is now acknowledging Netflix’s strength in the home entertainment space and is planning to acquire 21st Century Fox. Disney will use Fox’s content to launch a new streaming service to compete with Netflix.

Netflix has previously said that it expects Apple and Disney to emerge as some of its future competitors.

With Netflix’s content budget ballooning, the company will need attract more subscribers and get each subscriber to pay more. Perhaps that is why the company is currently “testing” a new, more expensive ‘Ultra’ subscription package.

- Source: The Economist



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