With more options than ever and competition only getting more intense, many of the streaming giants are spending fortunes every year on producing new content to please their current subscribers and attract more. Netflix, as an example, spent $17B on content in 2020, and in a letter to shareholders outlining first quarter earnings earlier this week, said it won’t back off in 2021. That’s particularly welcome news for subscribers considering the production difficulties around the world that have been caused by the pandemic.
Netflix addressed those production difficulties in the letter and even put a direct figure on how much it plans to spend this year. It turns out the number is the same $17B it spent last year. You can read an excerpt of the letter to shareholders below, courtesy of Deadline…
While the roll out of vaccines is very uneven across the world, we are back up and producing safely in every major market, with the exception of Brazil and India. Assuming this continues, we’ll spend over $17B in cash on content this year and we’ll continue to deliver an amazing range of titles for our members with more originals this year than last.
Unfortunately for Netflix, it wasn’t all good news this week. The streaming giant was well below investor forecasts for new subscribers. Wall Street was hoping to see the company add 6.29M subscribers during the first three months of 2021, but Netflix was reportedly only able to attract an additional 3.98M. That miss, along with the company lowering expectations for Q2 caused a downturn in stock performance.
Exactly why Netflix missed its subscriber goals is an open question. The company reportedly blamed its own content not driving enough interest, but in its defense, Bridgerton was clearly a breakout hit that attracted tons of attention and goodwill. Maybe that appeal was strong within Netflix’s current subscriber base and didn’t do enough to draw in new subscribers? Maybe Bridgerton did its part and there weren’t enough other shows to help the cause? It seems likely more people getting back to work and being able to do things outside the home probably played a role too, but it’s hard to know when you’re dealing with something as complicated as subscriber rates.
Regardless, the best thing Netflix can do for itself is offer compelling original content, worthwhile programming from other countries and good movies to stream. That costs money, and the streaming service has proven over and over again it’s willing to spend. In fact, many experts are predicting Netflix will only increase content production over the next half decade or so and could soon be spending more than $20B per year. That’s way ahead of its competitors who are spending in the single digit billions. Hopefully all that investment will result in new and compelling shows that drive the desired subscriber rates.