Netflix has never been afraid to spend big bucks to acquire existing content and develop new programs. On the comedy front alone, Netflix over the past 12 months has spent hundreds of millions of dollars via deals signed with A-list comedians such as Jerry Seinfeld and Dave Chappelle. In recent months, Netflix has boasted that it plans to spend $7 billion on content in 2018, with the vast majority of that earmarked for licensing content. Now comes word that the streaming giant has since upped the ante and is willing to spend upwards of $8 billion for content next year. The move shouldn’t come as much of a surprise given that Netflix now faces increased competition from the likes of Hulu and traditional players like HBO.
Netflix’s letter to investors reads in part:
Our investment in Netflix originals is over a quarter of our total P&L content budget in 2017 and will continue to grow. With $17 billion in content commitments over the next several years and a growing library of owned content ($2.5 billion net book value at the end of the quarter), we remain quite comfortable with our ability to please our members around the world. We’ll spend $7-8 billion on content (on a P&L basis) in 2018.
Just as we moved from second-run content to licensed originals and then to Netflix-produced originals, we are progressing even further up the value chain to work directly with talented content creators.
So far, it’s hard to argue with Netflix’s content-first approach, financial prudence be damned. Over the last quarter alone, Netflix managed to add an additional 5.3 million subscribers, with 850,000 of those being U.S. customers. The streaming giant also generated $2.98 billion in revenue, barely besting Wall Street estimates. All told Netflix now boasts 109.3 million subscribers.