Credit: Netflix

In 2019, Netflix spent $15 billion on content, and by 2028 Wall Street’s BMO Capital Markets project the streaming giant will be spending $26 billion yearly. This is a 73 percent increase in nine years, which is a $1.2 billion yearly increase on average.

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$17 billion in 2020

However, the same company estimates Netflix will spend $17 billion in 2020. At that estimated increase, unless Netflix reduces spending in 2021 and beyond, its 2028 content expenditure will be closer to $33 billion yearly, not $26 billion.

Netflix’s competitors are projected to spend the following in 2020:

  • Disney+ will spend $1 billion on original programming
  • HBO Max will spend $2 billion on original programming
  • NBC Peacock will spend $2 billion across two years of original programming.
  • Apple TV+ will spend $6 billion on original programming.
  • Amazon Prime Video will spend $7 billion on original programming.

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Snowballing content

From the $17 billion, over $6 billion is on content commitments made in previous years. This snowballing commitment makes the corporation’s debt look perilously out of control.

Netflix has $14.6 billion in long-term debt and $19.1 billion in obligations to content suppliers currently. Despite having 160 million subscribers worldwide, and being a household brand, at some point, addressing long-term debt has to be a priority.

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Globally growing numbers

Netflix are aggressively chasing accessible markets in Asia by signing big deals with content creators. They also have growing subscription numbers in Europe, the Middle East, Africa, and South America. The only territory where the subscription has slowed is in North America.

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Tweaking North America

The fact subscriptions are growing globally means Netflix won’t have to act drastically in North America. However, shared accounts, new subscription price points, and content spending will adapt to stimulate growth in the slowing market.

We predict Netflix will do the following in 2020 and beyond:

  1. Netflix accounts will have IP address locks to stop account sharing.
  2. A new subscription model for 5G streaming (mobile devices) only.
  3. Content expenditure will leverage interests in growing territories. For example, The Witcher was a huge Eastern European book series and Messiah focused on Middle Eastern prophecy.

Some analysts also think that Netflix will end up with a free service option with ads. This is unlikely unless subscribers decline in consecutive quarters.

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