Analysts: Netflix Spending $17 Billion on Content in 2020

Go big or go home. That appears to be the motto at Netflix when it comes to original content spending.

New data from BMO Capital Markets contends the SVOD behemoth will spend about $17 billion on original content this year, up $2 billion from 2019. Netflix ended the third-quarter (Sept. 30, 2019) with more than $24 billion in long-term debt to bond holders and third-party content producers.

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By comparison, NBC Universal’s pending Peacock streaming service reportedly will spend upwards of $2 billion on original content in 2019. HBO Max and Disney+ are spending from $1 billion to $2 billion on content this year.

“We continue to believe the ‘streaming wars’ narrative is false and there will be multiple winners in global streaming,” analyst Dan Salmon wrote in a note. Indeed, BMO remains bullish on Netflix with a “buy” rating on the stock.

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In Q3, Netflix launched 802 hours of original programming, including Golden Globes winners and Oscar contenders The Irishman and Marriage Story.

“We continue to believe Netflix will hit or exceed its U.S. paid net add guide,” John Blackledge, analyst with Cowen & Co., wrote in a separate note.

Netflix reports fourth-quarter fiscal results on Jan. 21.

 

Wall Street: Netflix Top Choice for TV Entertainment

Consumers in the United States are increasingly choosing Netflix for their TV entertainment, according to a new Wall Street survey.

Investment firm Cowen & Co. found that 27% of 2,500 respondents in a recent survey chose Netflix, compared with 20% opting for basic cable and 18.1% for broadcast television.

Among the younger 18-24 demo, the percentage of respondents choosing Netflix increased to 40% — ahead of perennial favorite YouTube.

Cowen analyst John Blackledge said the survey underscores how important Netflix has become to the average household, especially among millennials.

The analyst said the subscription streaming pioneer upped original content releases 51% in the second quarter (ending June 30) to 452 hours compared to the previous-year period. Netflix is on tap to spend $8 billion on original content this year.

“[Netflix] continues to ramp its original content offering, including local originals in many international markets,” Blackledge wrote in a note as reported by MarketWatch.

Indeed, Netflix is projected to grow its international subscriber base from 83.6 million subs at the end of 2018 to 255.2 million in 2028.

Daniel Ives, chief strategy officer at GBH Insights, says the cord-cutting phenomenon is continuing to accelerate.

“It’s really about content,” Ives told Al Jazeera. “Netflix [has] really created a content arms war and you’ve sort of seen this across the board with the consolidation across the sector between AT&T, Time Warner, Disney and Comcast … it all speaks to ‘content is king’ in this cord-cutting world.”

“Ultimately, the only way you drive international sub growth is international content,” Ives said. “Whether it’s the Middle East, Africa or other parts of the world you’re trying to penetrate … it has created a new age for content and Netflix recognizes that as they expand internationally, content is the key.”

Netflix announces Q2 results July 16.