Netflix Content Spend Set To Plateau At $17B For Next Few Years

Jill Goldsmith
·2-min read

Netflix executives see content spending of about $17 billion in 2021 lingering there through 2023.

It’s the latest shift for the giant streamer that’s always been gung-ho about spending and was seen as nosing up to the $20 billion range. But as part of an overall industry rethink — and its own — CFO Spencer Neumann said, “We are expecting to spend about $17 billion this year, and we are in the right ZIP code.”

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“We have come through a pretty big business transition,” he said during the company’s post-earnings second-quarter video call, referring to a plunge during the past five to 10 years into original production, which now makes up over 60% of the total. Content spend will continue to grow but be “moderated,” he said. “We have gotten smarter in how we can direct our spend for greatest impact.”

“We spent the way we spent to get to where we are today,” said co-CEO Ted Sarandos, agreeing that “in general, we are kind of in the right ZIP code” for the next few years.

The execs stressed that Covid costs, which have inflated total spending recently, are way down.” Stranger Things 4 came up again in this context — it helped stem subscriber losses last quarter but inflated overall costs.

“That show, in particular, was affected [by Covid] as much as any because of the young cast, the size and scope of the production and multiple locations we shot it in. It was a very expensive burden to deliver it,” Sarandos said, prompted by founder and co-CEO Reed Hastings.

“One of the catalysts for splitting the season in half was how long it took to produce that show,” he added, “and a lot of that was stalled because of early shutdowns of the production, and restarting production and being extremely careful with the cast of the show early on in Covid. So it was more financially impacted than a lot of our other projects were. … If you did that again, you might even get a few extra episodes out of it.”

The push and pull around spending is extreme. Doug Anmuth of JPMorgan, who was asking the questions, noted that half of the investors he talks with want streamers to spend more, while others want a big pullback.

“Welcome to my life,” Sarandos joked.

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