Here's how much Netflix is spending to beef up its original content catalog
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Netflix (NFLX) is spending up to $2 billion on original content this year in its ongoing mission to become the go-to platform for streamed video.
The Los Gatos, California-based streaming giant plans on spending roughly 25% of $8 billion — the equivalent of $2 billion — on original content in 2018, according to Chief Content Officer Ted Sarandos. While Sarandos initially disclosed the amount at MoffettNathanson’s Media & Communications Summit 2018 in New York in May, the figure has not been widely reported.
Netflix’s closest competitors, including Amazon (AMZN) and Hulu, declined to specify how much they’re spending this year on programming. However, MoffettNathanson, an independent research firm, estimates Amazon will spend $4.5 billion on licensed and original content this year, while Hulu will spend $2.5 billion overall on programming. (Hulu does not operate outside the U.S.)
Apple (AAPL), which hired two Sony Television execs in December to lead its original content efforts, could reportedly spend $1 billion this year on original content. That’s a fraction of what Netflix is poised to spend but unsurprising given Apple just began ramping up its efforts last year, with original shows like the reality show “Planet of the Apps.”
Indeed, MoffettNathanson suggests Netflix is very likely outspending the competition, including Hulu and Amazon on original content alone. Look no further than the sheer amount of original content being uploaded on a weekly or monthly basis on Netflix versus the amount of content uploaded on competing streaming services.
Original content as a differentiator
For Netflix, the company’s strategy continues to be beefing up its content catalog, with a heavy emphasis on original and local content as a way to distance Netflix from the competition and add new users each quarter. It’s a strategy that’s working so far: the company added 7.4 million subscribers during the first quarter — its second-largest period of subscriber growth ever — bringing Netflix’s total user base to 125 million.
This year alone, Netflix plans to have roughly 1,000 original series and films shot in 17 countries on the service. Over 400 of those originals are set to premiere sometime between now and the end of this year. Some of those originals are shows returning for another season — “13 Reasons Why,” “Grace and Frankie” — but many more are all-new properties, including the sci-fi series “Altered Carbon,” and the heavily hyped flick “The Cloverfield Paradox.”
At least some of those gambles on original content have paid off. According to Nielsen estimates, over 11 million U.S. viewers watched the buddy cop flick “Bright,” starring Will Smith, during the first three days it was available for streaming in late December. Although the movie was roundly panned by critics — Bright has a 26% rotten rating on RottenTomatoes — viewing numbers were enough for Netflix to greenlight a sequel. (Yes, really.)