AS the streaming competition continues to shape up, Netflix has turned the focus on bettering its video content, with plans to increase its annual budget for it.
Data from financial comparison site Bankr estimates that the video streaming service provider will spend about US$19.03 bil on video content this year, an increase of 10% from last year’s US$17.3 bil.
More budget for Netflix originals
Since Netflix launched its first original series in 2013, the streaming service has put its original content front and centre with a significant budget allocation.
Over the years, Netflix routinely raises its debts to fuel content spending on producing its originals as most of them requires more cash upfront.
Furthermore, the company is reportedly lining up a higher budget on originals from the Asian market.
After successfully producing shows like the Korean zombie period thriller “Kingdom” and reality series “Indian Matchmaking,” Netflix seeks to make a mark in a region and match up the competition.
Notably, the region is witnessing a growth in subscribers, growing even higher since the pandemic started.
The research showed that the number of Netflix’s paid subscribers have grown to 807.87% globally from 3Q 2011 (21.5 million) to 3Q 2020 (195.15 million).
With the prediction of continued growth in the number of subscribers, Netflix is expected to be able to allocate additional revenue to further expand its budget spent on content.
By reinvesting in original shows and movies, it will contribute to the retaining of subscribers and gain new subscribers as well.
However, Netflix has been witnessing a peak in cash burns. Proceeds from the cash burns area are channelled to original content spending as the proceeds are also used in investments, working capital, and potential acquisitions and strategic transactions.
Although it is still unclear on how the company plans to spend the video content budget allocated for 2021, it is worth noting that the company halted production early this year due to the pandemic.
At the moment, Netflix is putting more focus on buying content from other production houses.
While it is still receiving stiff competition from Disney+ and Apple TV+, Netflix holds the advantage of being able to provide its network globally.
Overall, Netflix needs a lot of video content to remain competitive. However, the shows need to retain subscribers especially those onboarded during the pandemic. If the subscriber growth slows down, Netflix might need to look for other ways to attract more users.
For more in depth statistics, visit WallStreetZen on its recent research regarding Netflix.– Feb 12, 2021
