Netflix to spend $7B on content in 2018

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in iPod + iTunes + AppleTV
Apple is reported to spend some $1 billion on original content in 2018, but the number pales in comparison to streaming leader Netflix, which anticipates to spend seven times that on its own offerings next year.




In an interview with Variety, Netflix Chief Content Officer Ted Sarandos revealed the media giant plans to spend $7 billion on content in 2018. The figure is up from more than $6 billion in 2017 and $5 billion in 2016, the report said.

"The vast majority is still licensed content," Sarandos said. "We're still a couple years from seeing it go 50-50."

While Netflix offer an impressive slate of original shows, including "House of Cards," "Orange is the New Black," "Stranger Things" and "Master of None," it continues to be heavily reliant on content licensed from mainstream production houses. Sarandos is looking to expand the company's in-house content efforts in the years to come, and that takes money.

With total gross debt at $4.8 billion, and $15.7 billion earmarked for streaming commitments, analysts have cast a critical eye toward Netflix's increasingly voracious spending habits. Sarandos, however, maintains that the company is being fiscally responsible.

"We're not spending money we don't have," Sarandos said. "We're spending revenue."

A good chunk of that spend goes to the development of new, and sometimes daring, branded content. For 2017, the outlay includes 17 regional TV series crafted to play well with local audiences like Brazil's "3%" and Germany's "Dark." Sarandos expects the number of local Netflix shows to increase to 70 to 100 series "in the next couple of years."

The aggressive strategy appears to be paying off, as Netflix's scripted TV series garnered 92 Emmy nominations this year, up from 54 in last year's awards season.

As its scripted shows flourish, Netflix is turning its attention to unscripted reality series. The first original offering, the sports competition series "Ultimate Beastmaster," has been renewed for a second season, while the company works on projects in other genres. Some 50 unscripted shows are in the hopper and will begin trickling out to Netflix customers next year.

In addition to TV series, Netflix is taking on more involved -- and expensive -- initiatives like original feature films. So far, the firm's movies, including "Sandy Wexler" starring Adam Sandler, and "War Machine" featuring Brad Pitt, have debuted to less than stellar reviews. Director Bong Joon-ho's "Okja," which won critical acclaim after its premiere at the Cannes Film Festival, is an exception. Anchoring Netflix's original film lineup for 2017 is the $90 million Will Smith vehicle "Bright," set for release in December.

According to reports earlier today, Apple is taking the next step toward becoming a streaming competitor by committing $1 billion for video content next year. Substantial seed funding for an industry upstart, the money could be used to acquire and produce as many as ten TV shows.
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Comments

  • Reply 1 of 26
    boeyc15boeyc15 Posts: 986member
      7 billion dollars in one year for TV shows...sigh. And now Apple is going to jump in with 1 billion... double sigh.
  • Reply 2 of 26
    irelandireland Posts: 17,785member
    Apple should have acquired Netflix when it was cheap. Some load of mediocre Netflix films and documentaries on there though. Apple should consider upping their spend on content.
  • Reply 3 of 26
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    tmay
  • Reply 4 of 26
    7 billion is mostly licensed content. How much are they going to spend on original? 2 billion? Think about how many shows and movies Netflix produces; if they are doing that with 1 - 3 billion, then a 1 billion outlay by Apple just to get started in the game is pretty serious.
    Solilolliverleavingthebigg
  • Reply 5 of 26
    irelandireland Posts: 17,785member
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    Apple would wish to be in Netflix’s position. Mind share alone here is huge.
  • Reply 6 of 26
    SoliSoli Posts: 10,033member
    Netflix has been putting out some great stuff. I look forward to what they'll accomplish in the coming future.
    lolliverasdasd
  • Reply 7 of 26
    7 billion is mostly licensed content. How much are they going to spend on original? 2 billion? Think about how many shows and movies Netflix produces; if they are doing that with 1 - 3 billion, then a 1 billion outlay by Apple just to get started in the game is pretty serious.
    ^^^this^^^.    You got to figure that all the content ITMS delivers for others, and apple considers that zero cost (they didn't buy it, the customers did), and they get their 5-30% cut of that.  Just build great hardware, and make enough on the Content delivery to make the bond payments.

    However, getting a 'Sopranos' / 'Game of Thrones'  like must-see content to drive 10-20 million iPad/AppleTV buyers into the fold every season isn't a bad variation of a business model either....


    lolliverMacPro
  • Reply 8 of 26
    boltsfan17boltsfan17 Posts: 2,294member
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    After painfully sitting through 10 minutes (all I could take) of Planet of the Apps, Apple should license some content. From what we've seen from Apple, they are not even in the same ballpark as Netflix. Netflix has been putting out some great stuff for years. 
    irelandmacky the macky
  • Reply 9 of 26
    SoliSoli Posts: 10,033member
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    After painfully sitting through 10 minutes (all I could take) of Planet of the Apps, Apple should license some content. From what we've seen from Apple, they are not even in the same ballpark as Netflix. Netflix has been putting out some great stuff for years. 
    They already have with Carpool Karaoke. Then you have all the movies and TV shows (and music) they sell and rent, which are licensed to them by the content owners.
    edited August 2017 lolliver
  • Reply 10 of 26
    kevin keekevin kee Posts: 1,291member
    I like Apple's Carpool Karaoke, it's lighter in terms of contents and good for promoting music.
    Solilolliver
  • Reply 11 of 26
    boltsfan17boltsfan17 Posts: 2,294member
    Soli said:
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    After painfully sitting through 10 minutes (all I could take) of Planet of the Apps, Apple should license some content. From what we've seen from Apple, they are not even in the same ballpark as Netflix. Netflix has been putting out some great stuff for years. 
    They already have with Carpool Karaoke. Then you have all the movies and TV shows (and music) they sell and rent, which are licensed to them by the content owners.
    I mean licensed content as in what Netflix does. They have the exclusive licensing rights to stream shows like Orange is the New Black. For an example, Apple could buy the licensing rights for a nature documentary and have exclusive streaming rights. A nature documentary would be right up Apple's alley. 
  • Reply 12 of 26
    Scot1Scot1 Posts: 101member
    Sadly it won't include season three of sense8
    lolliver
  • Reply 13 of 26
    StrangeDaysStrangeDays Posts: 12,205member
    ireland said:
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    Apple would wish to be in Netflix’s position. Mind share alone here is huge.
    Yes but why? Apple’s device business is already historic in its ongoing success, and they have more in the bank than anyone. Doomed?
  • Reply 14 of 26
    SpamSandwichSpamSandwich Posts: 33,407member
    Soli said:
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    After painfully sitting through 10 minutes (all I could take) of Planet of the Apps, Apple should license some content. From what we've seen from Apple, they are not even in the same ballpark as Netflix. Netflix has been putting out some great stuff for years. 
    They already have with Carpool Karaoke. Then you have all the movies and TV shows (and music) they sell and rent, which are licensed to them by the content owners.
    I mean licensed content as in what Netflix does. They have the exclusive licensing rights to stream shows like Orange is the New Black. For an example, Apple could buy the licensing rights for a nature documentary and have exclusive streaming rights. A nature documentary would be right up Apple's alley. 
    Unless I'm mistaken, the original content Netflix develops is theirs. They own it. Therefore, beyond whatever they paid for development they would theoretically pay nothing additional.
  • Reply 15 of 26

    All the 3 Adam Sandler movies are bad. I'm not expecting another Happy Gilmore, but at least a "You Don't Mess With The Zohan" would have been nice.

    The 3 Netfilx ones are even worse than "That's My Boy".

  • Reply 16 of 26

    All the 3 Adam Sandler movies are bad. I'm not expecting another Happy Gilmore, but at least a "You Don't Mess With The Zohan" would have been nice.

    The 3 Netfilx ones are even worse than "That's My Boy".

    They were also among the highest rated Netflix programming ever. Which is why Netflix signed several others to similar deals after the Sandler one, which lest we forget was considered very risky and was much mocked at the time.
  • Reply 17 of 26
    It's foolish to look at Apple's 1BN spend on original content as insufficient, Netflix has been around a long time and by their own admission original content is less than 3.5BN and probably closer to 2BN - all for quite a number of shows, each stocked with decent talent. Both are on the same side here. Netflix are in a win/win position with Apple, it's the traditional providers who are dragging their feet, refusing to be on AppleTV or license their content for decent terms. Original content by Apple gives them a few more bargaining chips both in deals and luring more people to Apple's media ecosystem.
  • Reply 18 of 26
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    Sometimes I wonder about the ... perspective of certain Apple fans when it comes to stuff like this. Netflix started from scratch by guys with no major backing, connections or investors. They began with a DVD by mail service that totally disrupted the industry, along with Redbox driving venerable Blockbuster - and its competitors - out of business.

    Then they switch to an Internet streaming model. Years before anyone else considered it viable and most people thought they would fail. Most of the content owners refused to release it to them, so they got real creative by getting the rights to lesser known titles as well as heavily emphasizing international and niche content that wasn't getting much revenue from either the in-store DVD rental business that Netflix - along with Redbox - were killing off and were being ignored by the cable networks. They also created their own film company to make their own movies - mostly action films and comedies - on the cheap.

    Then the content owners were like "wow, we can exploit this as a separate revenue stream!" So they began giving major titles - movies and syndicated TV shows - to Netflix whose growth began to explode. Problem? It pretty much required being viewed through a browser on a PC, which was a bad experience and limited growth. Solution? Create Roku. AND they were smart enough NOT to make it a proprietary product that would only offer Netflix and was owned by Netflix, but they spun it off as an independent company and a Linux-based platform that encouraged anyone to create their own channel and list it in their "app store" with devices that offered gigabit ethernet, dual band wifi, audio to headphones, and 720p/1080p HD back in 2010. By contrast, Apple, despite having created the set top box market in the first place 3 years prior, did not come out with hardware capable of truly competing with Roku until FIVE YEARS LATER with devices that cost ONE HUNDRED TWENTY DOLLARS MORE than the entry level Roku Express.

    Then the content creators had the (bad) idea: why keep giving away this valuable content to Netflix (as well as imitators like Hulu and Amazon Prime who exist only because of Netflix) when they can create their own streaming ventures, keep all the profit to themselves and lock out competitors? (It is a bad idea because no one is going to pay $7.99 or $11.99 a month to watch CW and only CW, or Disney and only Disney. Just as largely no one watches Crackle to see only Sony content, and Crackle is actually free. But hey, they'll find out.) Netflix fights back by shifting from primarily movies - hence the name - to TV shows, and creating their own original programming.

    The best part: each of these developments Netflix did PROACTIVELY. They saw how hardware limitations were hindering their growth, so they created Roku. (Whose primary contribution was spawning a ton of imitators, but Netflix doesn't care because they don't need profits from Roku hardware anyway ... so long as all the imitators carry Netflix - and they do except for one odd duck that is a marketplace failure - they are happy.) They needed cheap film content because premium film content was too expensive? They offered old movies, international films and created their own direct to video company. Companies jacked up the price of films? Switch to TV. Companies started reserving their content for their own channels? Create their own TV shows, and sign former A list actors whose movies aren't doing well at the box office to make Netflix films. And so on.

    So the idea that Netflix represents "baggage" that Apple wants to avoid and "mistakes" that Apple doesn't need to learn from is ridiculous. Netflix has been nothing but an agile, innovative and resilient disruptor who half the time skates to the place the puck is going to be before it gets there - they were the first major company with a business model based entirely on cloud infrastructure, the first to invest heavily in HD(first 1080p then 4K) content, was the first major entertainment player to heavily embrace mobile devices and on all platforms, was an early adopter of VR/AR etc. - and the other half are successful at reacting to the puck and getting in front of it before it gets past them. Netflix has gone through like 5 massive changes in their business model and strategy in the time that it often takes Apple to launch a single product. And again, this is a company that started from scratch with no major backing, no connection, no name brand loyalty and no real advertising (which they STILL do not do) while still offering all content free to subscribers (unlike Amazon who requires you to rent or purchase most content, and iTunes/Google Play who requires you to rent or purchase nearly all content).

    Think about this: their major competitors are Amazon Prime, which rides on the back of Amazon's already existing cloud service, and Hulu, which is owned by a consortium of the content creators. This makes Netflix the biggest independent media operation on the globe by far.

    No, Netflix hasn't been perfect, not by a long shot. For example, their paying huge money to lure big name directors to make expensive TV series was a massive failure. Even there, to their credit, they realized their mistake and pulled the plug quickly rather than doing the ego trip thing of sticking with a bad idea for years and wasting a ton of money in the process in order to protect executive pet projects and not wanting the embarrassment of admitting that they were wrong. But even with their missteps, Apple fans need to talking about raiding Netflix for tech and executive talent instead of learning from their mistakes.

    Examples: you want to compare the multi-platform Netflix app to to the 15 year plus nightmare that is iTunes? (And Apple didn't even create iTunes ... they bought SoundJam and renamed it, and hobbled it of several useful features.) Even better: you want to compare what is now an entirely cloud infrastructure web and mobile delivery company (one whose business model Satya Nadella is scrambling to adapt Microsoft to) with the absolute mess that Apple Maps was not long ago, the continuing issues with iCloud, and a Siri that is lagging behind Google Assistant and Siri (and needs backend services to be provided by Microsoft Bing, who is able to turn around and optimize Siri competitor Cortana)?

    But yeah, keep thinking that Apple is going to avoid baggage, learn from mistakes and deliver a better product. But here's the best part: even if they do, only the people who own Apple hardware will know about it and benefit from it. And not ALL Apple hardware mind you. Why? Because ... folks who own iPhones, iPads and Macs will have no practical way of watching the $1 billion in content on their $3000 big screen Samsung HDTVs. So even if Apple were to come out with the next "Stranger Things" or "House of Cars" most people will have no way to watch it on a screen that is bigger than 11 inches. Are these people going to run out and buy a $150 Apple TV to watch Apple content? Not going to happen if they already own a smart TV or an existing set top box or even a Blu ray player with streaming capability. Netflix doesn't have that problem, never did, and are able to deliver their content globally to people with widely diverging economic circumstances because of it. Again, Apple would need to succeed at becoming more like Netflix - no easy task! - before they can even think of beating them at anything.

  • Reply 19 of 26
    ireland said:
    Thankfully Apple doesn’t have the video licensing headaches Netflix has! Growing organically just might be the best way can actually learn from its own mistakes without the baggage of another company. 
    Apple would wish to be in Netflix’s position. Mind share alone here is huge.
    Netflix is great. Looking forward to marathoning The Defenders Friday.

    One fact I don’t forget is the Netflix we see today was not the Netflix from 5+ years ago. Netflix had shaky times as it grew to the powerhouse it is today. 

     Apple is just getting started with video content just as it got started with iPods, iPhones, iTunes, iPads, Apple Watch and augmented reality. Apple doesn’t need Netflix. 

    As for mind share, we’re talking about Apple. There is mind share. 
  • Reply 20 of 26
    But yeah, keep thinking that Apple is going to avoid baggage, learn from mistakes and deliver a better product.

    What "better product" are you referring to? The assumption that Apple currently intends to compete directly with Netflix isn't supported by the evidence. Most of what they're producing is music oriented, and Planet of the Apps is totally different than what Netflix is focused on. 
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