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Netflix plans $8bn content spend in 2018

Season two of Netflix original series Stranger Things launches this month

MIPCOM: Global streaming giant Netflix has said it will spend US$8bn on original content next year as competition for rights to third-party shows ramps up in the SVoD space.

In a statement to shareholders as the streamer announced its third-quarter results, Netflix said it was on track to exceed US$11bn in revenue this year.

The company is known for original series such as House of Cards, Orange is the New Black, Narcos and Stranger Things but the majority of the film and TV content in its library is acquired series and one-offs.

Today the streamer said the proliferation of new SVoD platforms around the world – such as that announced by Disney earlier this year, which will see its content withdrawn from Netflix in the US and placed on its own dedicated service – means it must focus more attention and money on its own commissions.

The statement to shareholders said: “While we have multi-year deals in place preventing any sudden reduction in content licensing, the long-term trends are clear. Our future largely lies in exclusive original content.”

It said investment in originals accounted for more than 25% of its total profit-and-loss content budget in 2017 and will grow further, with US$17bn committed over the next “several years” and a spend of US$7bn to US$8bn on content planned for 2018.

Scandal and Grey’s Anatomy creator Shonda Rhimes left ABC to sign an exclusive production deal with Netflix in August, and the streamer made its first play in the mergers and acquisitions space when it acquired comic book writer Mark Millar’s Millarworld that same month.

Netflix said: “Our goal is to work with the best creators in the world and own the underlying intellectual property so that we can continue to deliver amazing content to our members across the globe.

“Since 2013, we’ve taken the long-term view that we’re in the early stages of the worldwide, multi-decade transition from linear TV to internet entertainment. Recently, it’s been unfolding right before our eyes.

“Disney announced plans to launch direct-to-consumer services for ESPN and its other brands; cable network owners are licensing their channels to virtual MVPDs like Hulu, YouTube, Sling TV and DirecTV Now; CBS’s All Access is expanding internationally; Apple is reportedly planning on spending US$1bn on original content; and Amazon is streaming NFL games while its Prime Video service has gone global. Facebook launched its Watch tab for original videos.

“It’s an exciting period and both media and technology companies see the same big opportunity as we do. We have a good head start but our job is to improve Netflix as rapidly as possible.”

Netflix has so far had to borrow billions of dollars to pay for its rapid content expansion, and recently announced an increase in subscription fees around the world.

The latest results showed an increase of 5.3 million members globally in the third quarter of the year, with 15.5 million members added so far in 2017.

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