Summon all TV executives, directors, writers, network moguls, and cable companies in a single room and they'll all agree on one thing: Being in the TV business is difficult. Netflix is slowly grasping that concept as its budget for programming continues to balloon.
Netflix will spend somewhere between $7 billion and $8 billion on content next year, significantly up from the $6 billion it's spending this year, the video-streaming service announced during a Q3 earnings call Monday, Oct. 16.
In the third quarter, Netflix added 5.3 million new subscribers, which surpassed expectations, and raked in a revenue of almost $3 billion, which represents a 30 percent year-over-year increase. The service now delivers a smattering of original programs and licensed content to 104 million subscribers, with much of the growth coming from international markets.
How Much Is Netflix Spending On Original Shows?
Netflix says that 25 percent of its programming budget is now dedicated to original programming, and it's only expected to grow moving forward. At this rate, Netflix already spends more than its competitors, such as HBO, FX, and many others. As the old saying goes, one has to spend money to make money, and shelling out enormous cash for its own series lineup is certainly a good investment.
In recent years, Netflix has become one of the most reputable producers of content in the TV landscape, pulling in numerous Emmy nominations year after year thanks to critically lauded series such as House of Cards, Orange is the New Black, Stranger Things, Master of None, and many others. Netflix being a prime solution for cord cutters, who are looking to cut their cable subscriptions and settle on a video-streaming service instead, is also part of what makes Netflix so successful.
There's money to be made in on-demand video. Apple is also trying to lay the groundwork for its own streaming service, according to previous reports. It's allegedly pouring $1 billion to create its preliminary lineup of originals shows — certainly not as much as Netflix's, sure, but probably enough to assert itself as a serious Netflix competitor.
The Streaming Wars Are Heating Up
As The New York Times notes, Netflix's earnings call came as competitors are ramping up for a fight. Hulu, for one, has found some momentum after its original show, The Handmaid's Tale, won Best Drama Series at this year's Emmy Awards — the first time a streaming has won that award. Disney, on the other hand, is also planning to launch its own streaming service by 2019, a move that involves removing every single one of its movies from Netflix.
Netflix is planning big things. Scandal and Grey's Anatomy producer Shonda Rhimes is going to create a show for the streaming service, so is Glee and American Horror Story creator Ryan Murphy. It's also set to release the second season of Stranger Things later this October, which is sure to become a hit yet again.