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CEO Reed Hastings Says $8 Billion In Content Spending Isn’t Enough As Netflix Hits 125 Million Subscribers

Netflix plans to spend $8 billion on original content this year. It seems an obscene amount of money, but when you think of the streaming service’s 125 million subscribers and counting, it suddenly doesn’t seem all that much.  ( John MacDougall | AFP/Getty Images )

During the first quarter of 2018, Netflix gained more than 7 million new paying customers, bringing its total subscriber count to 125 million.

The numbers were well ahead of Wall Street's expectation for the video streaming company, with one analyst calling its earnings results "eye popping."

Even Netflix executives were surprised about the company's growth in terms of viewership, with CFO David Wells admitting:

"We've outperformed the business in a way we didn't predict. The business has grown faster than we expected."

Netflix And Original Content Spending

A huge part of Netflix's huge audience draw is its ongoing expansion of original content. Its library now boasts some of most diverse programs to ever hit the television landscape, including newcomers Queer Eye, Big Mouth, The End of the F***ing World, and One Day at a Time. Add to that a crop of new-season releases for Marvel's Jessica Jones, The Crown, and Stranger Things. These shows collectively paint a stellar tapestry of Netflix original programming, many of which have gone on to win Emmy Awards.

Netflix CEO Reed Hastings knows content is king. Though Netflix is at the top of the streaming game, he doesn't get comfortable. The company has been spending a lot of money on producing originals to stay on top, having burned $8 billion for 2018. That, of course, sounds like an insane amount of cash, but Hastings think it's still insufficient.

"That's spread globally. It's not as much as it sounds," he says.

How Much Does It Cost To Produce A Show?

If Netflix would be spending all that cash just for shows made in the United States, it seems like a lot, indeed, but Netflix also caters to international markets with local original programming. Factor in the company's planned film projects, not to mention festival movies it acquires from the likes of Sundance and SXSW, then that $8 billion start to look not all that much, really. It starts to get much smaller when you consider how much it costs to make an episode. Stranger Things, for example, reportedly cost $8 million per episode for season 2.

That's not all. Think also of all the existing content Netflix licenses from other networks, such as Grey's Anatomy and Scandal. Plus, the millions of dollars it pays to high-profile stand-up comedians for their specials. Jerry Seinfeld was reportedly paid $100 million for his comedy deal with Netflix.

In the end, though, subscribers are bound to benefit from Netflix's increasingly inflating budget for original content. The more original shows and films, the happier its paying customers will be.

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