Netflix content spend ‘to top $6bn’

Netflix’s spend on originals such as House of Cards is set to skyrocket

US-based streamer Netflix will have at least 130 million subscribers worldwide by 2020 and will spend US$6bn a year on content, but is likely to cut back on acquisitions by 2017, according to research revealed today.

Media experts Ampere Analysis said that around 6% of households globally will subscribe to the streamer by the end of 2020, while its nearest SVoD rival will be Amazon with 50 million users.

The analysts also predicted that Netflix’s annual originals and acquired programming budget, which has already funded shows including House of Cards and Orange is the New Black, will reach US$5bn by 2016 and will grow by a further US$1bn by 2018.

But Ampere added that Netflix’s focus on originals will leave “a short window to maximise licensing agreements.”

“If Netflix aims to hit the 50% of spend devoted to originals hinted at in a recent investor call by 2020, its expenditure on acquired content could begin to fall as early as 2017,” the company said.

Netflix claimed to have 63 million paying subscribers at the end of the second quarter of this year and is present in more than 50 markets, while the time viewers have spent watching Netflix has increased by 50% in two years.

Ampere added that these figures are hitting pay TV operators and said its own figures “show that as personal TV viewing time increases – whatever the channel or device – net additions of new subscribers to pay TV services are in decline, while SVoD is growing.”

Ampere said 41 million new customers have signed up for SVoD worldwide in 2015, while pay TV net additions have been in decline since 2011 and will reach just over 23 million worldwide this year, the lowest figure for more than 10 years.

Ampere also claims there is little crossover in terms of shows available between Netflix and Amazon, with the former’s typically more recent, while budgets were US$3.1bn and US$1.3bn respectively in 2014.

Richard Broughton, research director at Ampere, added that the differing acquisition strategies “have allowed each provider to thrive in its own content niche – consumers are quite happy to spend on both Amazon Prime and Netflix.

“Netflix subscribers across the US, Germany and UK are over 60% more likely than the average internet user to also watch videos via Amazon Prime.”