Netflix Plans to Spend $7 Billion on Content in 2018

By August 16, 2017 6 Comments

Netflix Chief Content Officer Ted Sarandos

Now that Apple has seemingly lost its spark, Netflix has become the most talked-about company in the world – and for good reason.

The streaming innovator is in the middle of disrupting several industries, having completely revolutionized television and now poised to do the same with the film industry. The company’s commitment to innovation has put Netflix head and shoulders above its closest streaming competitors in terms of both subscriber totals and critical acclaim; Netflix dominated other streaming services in this year’s Emmy Award nominations, picking up a total of 91 different nominations, proving that their original series and films are true forces to be reckoned with.

While the internet freaks out about Disney ending its streaming agreement with Netflix, the company continues to forge ahead signing high-profile talent and throwing an enormous budget at its original programming. Just days after the Disney turmoil, Netflix’s visionary Chief Content Officer Ted Sarandos stated that the streaming leader plans to increase its budget by $1 billion dollars over the next year.

In an interview with Variety, Sarandos says that Netflix will spend over $7 billion on content in 2018, up from $6 billion in 2017 and $5 billion in 2016. As of now, Netflix currently has $15.7 billion in outstanding obligations in deals for new series and films over the next few years. With such an astronomically-large budget, media analysts are already beginning to wonder if Netflix is “rescuing” or “ruining” Hollywood by creating such a singular creator-producer-distributor model. Sarandos counters those claims, however, stating that Netflix is merely on the forefront of what’s already a growing trend throughout the media industries:

I would say that the relationship between studios and networks has always been that of a frenemy. Everyone is doing some version of it already. They just have to make a decision for their companies, their brands and their shareholders on how to best optimize the content. We started making original content five years ago, betting this would happen.

Netflix’s forward-thinking, big-spending strategy has been paying off in huge ways. The company’s stock has gone up over 5000% since Netflix first launched streaming video, and global subscribers now total over 100 million. Some analysts might balk at such a large budget and predict that Netflix is in the midst of a valuation bubble, but given how successful their original content has been for them over the last few years, Sarandos and company likely know exactly what they’re doing.

Brett Tingley

Author Brett Tingley

Brett lives at the foot of the ancient Appalachian mountains in Asheville, North Carolina and writes about technology, science, and culture. Disclosure: Streaming Observer is supported by readers. Articles may contain referral links. For more information, see the disclosure at the bottom of the page.

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Join the discussion 6 Comments

  • Tom Simpson says:

    How has Apple lost it’s spark? From an observer standpoint, or an investor standpoint?

    It is still the most valuable company on the planet, and will most likely be the first Trillion dollar valuation.

    Don’t get me wrong, I love Netflix and how they’re helping buck the pay TV & MVDP market. However I wouldn’t compare them to Apple. Apple pays more in taxes than Netflix’s net income….

  • ladybqcrypto says:

    I will pay for Netflix service any day. The outrageous price for cable these days are ridiculous. That’s why I do not have cable. The content on Netflix is way better. Just my opinion.

  • James says:

    Subscribers are one source of revenue (the primary one in the short term – and they have lots of room to grow internationally). But, they are also building a huge library of content they own the rights to. Hulu paid 160 million to license Seinfield in 2015. If they can land on hit content through these investments they can always, worst case, find other ways to monetize it the future. Great content will pay back for years in one form or another.

  • Lonie says:

    The thing is, they are attracting content creating talent and that translates into above average content. There will be no failed over-budget block busters to write off.

    There will be stories that are worth telling as I suspect they will pay for that type of script and will have people with a track record or showing untapped talent for getting the story told.

    If you’ve got good content, people will stay subscribed… even when they raise prices.

    • KaVi says:

      There will be lots of over-budget blockbusters to write off the more content they produce. Case in point? Baz Luhrmann’s ‘Get Down’ Netflix Original show that cost them $ 160 ml if we include P&A and was a flop and cancelled. It’s just the reality of life – the more content you produce, the more shit content you produce.

  • jenny says:

    Nice! I am loving the shows they are coming out with!

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