In 2017, Netflix is the second biggest spender in media. The budget for 2017 is one Billion dollars more than it was in 2016. So how is it planning on spending this money?
Netflix Chief Content Officer Ted Sarandos has said that their goal was to "become HBO faster than HBO can become [Netflix]." HBO's content is almost exclusively original material, and Netflix expects its additional one billion to be spent solely on the costs of creating original content.
In fact, it is expected that by 2019 at least half of the budget will be spent on originals.
This may cost more upfront for Netflix, but in the past it has proven to be more cost efficient as users watch more each year.
Netflix's first Original Series was "House of Cards," and when they saw that the hours viewers spent watching matched the amount of money spent, the value of original programming became evident. Since then, Netflix has been a factory for hit original shows. "Orange is the New Black," "Stranger Things," and "Unbreakable Kimmy Schmidt," are just a few of the shows that have taken the internet by storm.
Netflix aims to have something for everyone, and it's doing a pretty good job.
Netflix is changing the way people watch TV. As more and more as time passes, it feels like a social requirement to have Netflix, just to keep up with the shows everyone is talking about.
And now that Netflix has enough original content to have a category dedicated to them, there is original Netflix material for everyone.
It isn't just shows. Original stand up specials and movies are becoming more common for the company, too. The film "Okja" is a Netflix original that is sparking critical acclaim and a big audience.
And besides its big-budget franchises, Netflix also produces children's shows that many of us would never know about unless we go into the Kids section. Animated series like "H2O: Mermaid Adventures" and "LEGO friends: The Power of Friendship," ensure that even the kids spend hours on Netflix originals.
Where they spend their billions
Netflix produces comedies, dramas, science fiction, historical fiction, documentaries, and more. Its 6 billion dollar content budget goes to quite a lot of material and it is proving to be an efficient use of money. Certainly it is more efficient than working solely as a library for already licensed material with no ads.
Recently, Netflix cancelled its original series "Sense8," due to it being too expensive. "The Get Down" was cancelled for the same reason. Many viewers believe that Netflix spends a lot of its advertising on the wrong shows, or that it is producing way more shows than audiences can keep up with.
Recently, an agreement between SAG-AFTRA and the Alliance of Motion Picture and Television Producers was made and that means actors in original series on streaming services like Netflix, Hulu, and Amazon, will be paid more.
This means that it will cost Netflix even more than it is already spending to create original material.
If Netflix wants to continue in its economic efficiency, it is going to have to make important decisions about where to spend its big budget.
