Netflix plans to top $6 billion content budget in 2017

By Jim O'Neill on Jul 28 2016 at 7:00 AM
Netflix plans to top $6 billion content budget in 2017

Netflix is planning to increase its investment in original and licensed content beyond the $6 billion it spent this year, Chief Content Officer Ted Sarandos told the Television Critics Assn. in Beverly Hills Wednesday.

“It’ll go up,” he said of spending, adding that the company’s ballyhooed $6 billion spend this year is on track. "We're hitting where we said we would last year and we'll have an update on that in the next few months.”

That content spend is being driven by increasing subscriber revenue that’s come from the company’s expansion to more than 190 countries last January.

And, despite a slowdown in subscriber growth in Q2, new users continue to sign up, he said, pointing out that, “Subscriber growth, not ratings, drives our revenue.”

That subscriber growth has been up and down in the past two quarters with higher tan expected growth occurring in Q1 followed by a lackluster Q2.

Much of that uncertainty, Sarandos said, will level out as Netflix learns more about its users in each market.

“Everything we learned about Latin America wasn't helpful at all in Italy and nothing we learned in Mexico really helped us in Taiwan," he said. But, he added, the company will learn what works in each country and adapt to the market.

Netflix also has faced increased competition in global markets. In India, for example, Amazon Prime Instant Video – which is its primary competitor in the United Kingdom and Germany – just announced it would roll out there by the end of the year… at a significantly lower price.

And, in much of Asia, Netflix is competing with local and regional OTT offerings that have more local-language content and, generally, a cheaper price tag.

But, he said, Netflix has been flexible elsewhere and has managed to create strong businesses in other regions, learning as it goes.

“Latin America (where it launched in 2011) was a really difficult process for us," he said. “Now it's such an important part of our global business.”

Sarandos also touched on ratings for Netflix programming, saying it wasn’t important in a non-ad-supported environment.

Stay tuned.

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