Netflix to spend $6bn on new content after subscriber rise

In the wake of news that Netflix’s subscribers revenue rose to US$2 billion for the first time in the September quarter, a report says that the global streaming giant plans to spend US$6 billion on new content in 2017 to draw more paying customers.

This is a $1 billion rise from this year, and a rise from its $4.91 billion content spend in 2015, according to the World TV Production Report 2016. This is larger than Australia’s market spend of US$2.4 billion. All of Netflix’s content spend is on US productions, which is attributes to its global appeal.

“We will keep investing in growing the content spend, even domestically, for quite a long time,” according to its Chief Executive Reed Hastings.

The investment will be on original series as Stranger Things, Orange Is The New Black and House Of Cards, and also on expanding its library of films and classic TV shows.

In comparison, Amazon’s current content spend is $2.67 billion while Disney’s is $11.84 billion.

Tied to this is speculation that Netflix is planning to make some content available to watch offline by the end of this year – after ruling it out two years ago. Depending on its licensing deals with TV networks and film studios, Netflix might not be able to put all its content offline. But it can certainly do so with its original content.

Netflix coyly responded to the speculation: “While our focus remains on delivering a great streaming experience, we are always exploring ways to make the service better. We don’t have anything to add at this time.”

Of the $2 billion fresh subscriber revenues, 40% came from outside the US. Its take-up in Australia was swift after it entered the market 18 months ago, with Roy Morgan Research reporting it reached 1 million in the first six months.

Netflix added over 50% more subscribers than it expected during the third quarter, adding 3.20 million internationally to a total of 83 million. Analysts had expected a rise of only 2.01 million. It has been marketing itself heavily outside the United States, and says it’s on track to “harvest material global profits” from next year.

In the United States, Netflix added 370,000 subscriptions, despite a price hike and competition from Amazon and Hulu, compared with analysts’ estimate of 309,000. Netflix expects to add 1.45 million subscribers in the United States in the current quarter.

Netflix is in over 130 countries. Plans to launch a service in China were abandoned this week for the time being. Instead it will licence its shows for “modest” revenue until it “eventually” launches there.