Netflix Says It Will Spend Up to $8 Billion on Content Next Year

https://www.nytimes.com/2017/10/16/business/media/netflix-earnings.html

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Netflix will spend between $7 billion and $8 billion on content in 2018, up from the roughly $6 billion it will spend this year, the streaming service said while announcing its third-quarter earnings on Monday.

Netflix added 5.3 million subscribers in the quarter, surpassing expectations, and had revenue of nearly $3 billion, a 30 percent increase from the same period last year. The company also saw its net income rise to $130 million, well over last year’s third quarter total of $52 million but short of the $143 million that Wall Street expected.

In after-hours trading, Netflix’s shares inched up 1.2 percent, just days after its stock surpassed $200 for the first time.

Netflix now has 104 million paid subscribers, and saw the bulk of its third-quarter growth come from international markets, which accounted for 4.5 million of its new subscriptions.

The company said that 25 percent of its total content spending was now dedicated to original programming, and that it expected that figure to grow. Netflix already outspends its rivals, including HBO, FX and CBS, while Apple has recently signaled to Hollywood it would spend more than $1 billion on original content.

The earnings announcement came as Netflix’s competitors are ramping up for a fight. Hulu has found some momentum after “The Handmaid’s Tale” won it the best drama award at the Emmys last month. The parent companies for Hulu — which include 21st Century Fox, Comcast, Disney and Time Warner — also now seem intent on selling the back libraries of their TV shows to Hulu rather than Netflix. And starting in 2019, Disney is planning on starting its own stand-alone streaming service, removing its library of movies from Netflix.

Reed Hastings, chief executive of Netflix, played down the Disney news, saying in an earnings call that new Disney movie releases were not available on Netflix in most foreign countries.

“In terms of its significance relative to growth, you can see we’ve done very well in international without it,” he said.

Another Netflix rival, Amazon, is going through a period of tumult. Roy Price, its head of content, was suspended last week after he was the subject of a sexual harassment allegation.

Amazon is also undergoing something of a programming pivot, after several years of making big-budget shows that have failed to gain any real traction. It also cut ties with The Weinstein Company after numerous allegations of sexual harassment were made against Harvey Weinstein, scrapping a project the company was producing from the director David O. Russell in which Robert De Niro and Julianne Moore were set to star.

Netflix continues to sign up big names, including Shonda Rhimes, who was lured from ABC, and Ryan Murphy, who has agreed to create a drama which will explore the origin story of the Nurse Ratched character from “One Flew Over the Cuckoo’s Nest.” In the next three months, Netflix will also release the second season of “Stranger Things” and “Bright,” a feature film starring Will Smith for which it has high hopes.

Part of the $1 billion to $2 billion increase in its content budget will come from original movies. Ted Sarandos, the company’s chief content officer, said that Netflix released eight films this quarter. By the end of next year, he expects the streaming service to release 80 original movies.