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Netflix Plans to Spend $7 Billion on Content in 2018

It looks like Netflix has no plans to let up on their spending. According to recent reports, Netflix plans to spend over $7 billion on content in 2018 up from $6 billion in 2017.

The question now is can Netflix keep this up. It’s not clear that all of Netflix’s growth is sustainable. Some analysts and industry insiders are skeptical of the company’s spending habits, arguing its stock is overinflated. “We’re not spending money we don’t have,” Sarandos counters. “We’re spending revenue.” Yet Netflix is $4.8 billion in debt according to reports, with an additional $15.7 billion in long-term content commitments with studios. “We have one of the low debt levels in the industry,” insists Sarandos.

Others are wondering if Netflix spending is an effort to off set future losses as studios pull their content. Yet Netflix seems very confident that they will keep their deals. “I would say that the relationship between studios and networks has always been that of a frenemy,” says Sarandos. Netflix has been down playing Disney’s move to establish itself as a streaming rival. “Everyone is doing some version of it already,” he says. “They just have to make a decision for their companies, their brands and their shareholders on how to best optimize the content.” Netflix, suggests Sarandos, has long been preparing for that inevitability. “We started making original content five years ago, betting this would happen,” he says.

So far Netflix current plan seems to be paying off as they recently topped 100 million subscribers.

Source: Variety

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5 Responses to Netflix Plans to Spend $7 Billion on Content in 2018

  1. Avatar
    Joseph ewing August 17, 2017 at 9:04 am #

    Netflix has been ahead of the curve, almost from the beginning.

    • Avatar
      Bellingerent August 17, 2017 at 3:15 pm #

      Yep and their spending habit on original content is actually the right idea because people tend to ignore that they’ve been LOWERING their spending on rights to outside content at the exact same time. So if you go from 6 billion on original content/5 billion on rights one year to $7 billion on original content/3 billion on rights in the next year, they’re actually lowering their costs while creating more incentives for people to subscribe due to the original content.

      I forecast a future where they have 250 million subscribers and spend upwards of $15 billion a year on content. 250 million x $10 = 2.5 billion a month or $30 billion a year. The amount spent on original content (while ludicrously massive) will seem like a bargain by that point.

  2. Avatar
    BigO August 17, 2017 at 9:34 am #

    As they are one of the three services we subscribe to on a regular basis (along with Amazon & Hulu), I am happy they are looking to add more content.

  3. Avatar
    mr Dave August 17, 2017 at 3:17 pm #

    I just hope they pay for content worth watching and not more fluff like “anatomy of a murder”.

  4. Avatar
    Vegas Steve August 18, 2017 at 11:52 am #

    It’s nice to see them pushing for new content, but this also adds to their mounting debt.