Netflix spends a significant amount of money on content every year and the budget goes up with every passing year. It spent $12 billion creating original TV shows, movies, documentaries, and more in 2018. It’s expected that this number is going to rise to $15 billion in 2019.
The company’s Q4 2018 earnings report revealed that it spent $12.04 billion in cash on content just last year. That itself was a 35 percent increase from the $8.9 billion that it spent on content in 2017.
Wall Street analysts predict that this figure is now going to climb by 25 percent to hit $15 billion in 2019 on a gross cash basis. The company itself told investors that it will continue to burn cash. It expects to post negative $3 billion in free cash flow this year which will be similar to last year. It will fund this spending rate by once again going to the debt markets. Its long-term debt stood at $10.4 billion at the end of last year.
The $15 billion will go toward its slate of original content on which Netflix is counting to drive subscriber growth. Some analysts do expect that Netflix’s spending in this area will cool off in the coming years but it is expected to hit a peak of almost $18 billion next year.
One major reason for Netflix’s continued heavy investment in original content is the extra competition in the market. Media behemoths Disney, NBCUniversal, and WarnerMedia are all going to jump into the streaming game this year so Netflix does need to take pre-emptive steps to ensure that it doesn’t lose subscribers.
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