Netflix to spend a whopping $20 billion on programming this year

While Netflix remains the player to beat when it comes to on-demand video, there’s no denying that the streaming giant has more competition today than ever before. Aside from the usual suspects — a list which includes Amazon and HBO — Netflix these days faces stiff challenges from Amazon, Disney, Hulu, and Apple. And that’s to say nothing of upcoming streaming services like Peacock and HBO Max.

In the wake of increased competition, Netflix has said that it’s solely focused on delivering the best content it can to consumers and that it’s not worried about rivals stealing away subscribers. In reality, though, Netflix’s penchant for significantly outspending rivals on content underscores the company’s realization that it needs to churn out as much content as it possibly can.

The amount of money Netflix spends on programming these days has mushroomed. In fact, a new report from DataDads relays that Netflix today spends a whopping 5x more on content than it did five years ago. The data comes from Netflix’s recent earnings report where the company indicated that it plans to spend an estimated $20 billion on content this year, a figure that includes original programming and costly licensing deals.

As a point of contrast, Netflix spent $12 billion on programming in 2018 and a relatively paltry $4.5 billion on programming back in 2015.

One interesting reason behind the huge jump, aside from Netflix investing more in original programming, is that licensing deals are becoming more costly in light of increased competition in the streaming space:

And of course it’s worth noting that as competition among streaming services continues to rise, the cost for the rights to a show or to produce a new original series go up as well. Bidding wars for content are becoming more normal in television, as show producers have more places than ever to pitch their ideas.

As a prime example, Netflix last year acquired the rights to Seinfeld — which will hit the streaming service in 2021 — for a whopping $500 million. And speaking to increased spending across the board, HBO laid out $1.5 billion for the rights to Big Bang Theory and Two and a Half Men.

Content spending aside, Netflix seemingly hasn’t been impacted — in any discernible way — by Disney Plus. During the recent holiday quarter, for example, Netflix’s subscriber base jumped by 8.8 million. All told, Netflix currently boasts more than 167 million subscribers, with an estimated 100 million of them residing outside of the United States.