– by Joseph Jammer Medina

Much has been said about the money Netflix is spending on their original content. When House of Cards on the streaming service, few could have foreseen what a powerhouse they’ve become in television. Not only do they produce a whole lot of content, but they’ve also helped to redefine what audiences expect from television.

No longer is it just television and movies. Thanks to them, and other premium services like HBO, we now have network quality television, cable quality television, and movies. However, Netflix wasn’t content to just produce their original content in addition to the licensed content from other studios. No, it’s become clear that they plan on making their content the prime attraction to their service.

This year, they spent a whopping $6 billion on producing original content, and next year, they plan on spending $7 billion. This is funded by debt, and while there have been questions as to whether or not their user base could possibly make the streaming service profitable, they certainly seem to be doubling down on this approach.

Speaking at Goldman Sachs’ Communacopia conference (via Variety), Netflix CFO David Wells spoke in the affirmative that they could foresee themselves spending as much as $20 million per hour of content.

“Certainly, we can support that level of quality if the [audience] is there,” he said to the crowd.

Now, let’s be clear here. By $20 million per hour of content, they’re essentially saying $20 million per hourlong episode of television. So what does that mean? For reference, Game of Thrones usually spends around $10 million an episode (though the latest season kind of broke that trend with its shorter run). In short, rather than leave those higher production value ideas to film, it sounds like they intend to carry that over to their television programming, so long as their user base continues to grow.

They’ve already been foraying into this territory quite a bit. Last year’s series The Get Down held the honor of being the most expensive TV show produced, with its 12-episode run costing $120 million. Of course, Netflix also canceled the show, but it still showed a willingness to bet big.

All in all, Netflix has always seemed to be of the opinion that content is king, and so long as other studios had the desire to make more money, they knew there was always the risk that once streaming became popular, other studios and networks would eventually diverge from Netflix. We’ve seen this trend happening recently, and even Disney has announced plans to pull their content from Netflix in 2019.

Rather than stay left out to dry, Netflix has ensured their longevity by investing in all this original content, and as a result, they’ve managed to garner 100 million-plus subscribers. And so long as that user base continues to expand, they seem more than willing to invest more and more to make sure their users’ hard-earned money goes towards making quality content.

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SOURCE: Variety, Vanity Fair


    Depends on the content. It could mean a $40 million feature film.

    • Joseph Jammer Medina

      In the source article, they specify TV.

  • Moby85

    As a marketer myself, this worries me because Netflix is forgetting or being ignorant of one of the key “Ps” of marketing: PRICE. Their price continues to go up and up, regularly, to support this content. They seem to think right now there’s no breaking point. But there will be. At some point people are going to wake up and realize they’re only getting near top-tier internet and paying $15, $20+ for what amounts to a single “SuperChannel” well, they’re going to start shedding viewers.

    • Victor Roa

      NAILED IT!

    • axebox

      Netflix is simply trying to get as many subscribers before they go public and cash out.

  • Derek NOLA

    Im trying to think of who could buy netflix or merge with them. disneys move is a big shot across the bow.. consumers cant afford to buy all these different services.. I dont count amazon because most people have it because of prime so they dont view it like its a subscription service in the same way they do hulu and netflix… theres been a lot of content i like that netflix is losing like american dad, futurama etc.

    why wouldnt netflix just buy warner bros or paramount or Universal

Joseph Jammer Medina is an author, podcaster, and editor-in-chief of LRM. A graduate of Chapman University's Dodge College of Film and Television, Jammer's always had a craving for stories. From movies, television, and web content to books, anime, and manga, he's always been something of a story junkie.