Netflix reportedly plans to spend $17 billion on content this year. The company is well known for popularizing the SVOD model and is currently the most subscribed and most-watched streaming service worldwide with over 200 million subscribers. However, despite its successes, Netflix faces a growing number of obstacles that could potentially hold it back from complete market dominance. Over the past year, numerous studios have launched their own streaming services to compete with Netflix including Disney+, HBO Max, Peacock, Paramount+, and several others. All of these services fragment viewership, taking watch-time away from Netflix.
Last year, during the height of the pandemic, Netflix benefited from a substantial bump in subscribers due to worldwide lockdowns. However, now that vaccines are being widely distributed and countries are opening up, the bump Netflix was enjoying has significantly declined as more people opt to go outside rather than stay at home. This was proven recently during Netflix's shareholder call when the company announced that they had their lowest subscriber growth since 2013 in their first quarter. With growing competition and the pandemic subsiding, Netflix is looking for ways to maintain their dominance.
One way the company is choosing to answer this question is by investing heavily in producing more Netflix Original content. Variety is now reporting that Netflix plans to spend $17 billion on content alone in just 2021. It is important to note that part of the reason that number is so high is because of last year's production delays which led to a more crowded schedule in 2021. Nevertheless, $17 billion is a huge increase from 2020's $11.8 billion that the company spent on content.
Netflix needs to keep producing a high number of titles to stay competitive in the "streaming wars". Other streaming services are relying on their high profile IP to boost subscribers, such as Disney+ with the likes of Marvel and Star Wars. Even HBO Max and Paramount+ have IPs like DC, Harry Potter, and Halo to promote their services. While Netflix has a bevy of hit originals, including Stranger Things and Bridgerton, they don't have a lot of marquee franchises to rely on. This is most likely why Netflix has begun investing in established IP like the Knives Out franchise which they paid over $400 million dollars to acquire the rights to.
Spending $17 billion on content this year is Netflix's way of staying relevant in the streaming conversation. Their hope is that by producing so much content, they're bound to produce a few buzzy hits like Tiger King or The Queen's Gambit. For every low-rated title Netflix releases, there is bound to be at least one high-quality offering that gets people talking. For now, that's Netflix's strategy but it remains to be seen if it can continue to work.
Source: Variety