Streaming giant Netflix has said it will spend a whopping US$8bn (AU$10.18b) on original content next year.
Chief content officer Ted Sarandos said Netflix will release more original movies next year than Hollywood’s three largest movie studios (Disney, Warner Brothers and Universal Pictures) combined.
Netflix has signed up more than 56 million customers outside the US. The company is ramping up production in several languages in a bid to sign more users in Europe, Africa, Asia and the Middle East.
Netflix will also spend more than US$1bn for marketing.
In a statement to shareholders Netflix said it was on track to exceed US$11bn (AU$14b) in revenue this year.
The company said the proliferation of new SVoD platforms around the world means it must focus more attention and money on its own commissions.
“While we have multi-year deals in place preventing any sudden reduction in content licensing, the long-term trends are clear. Our future largely lies in exclusive original content,” it said in a statement.
Programming licensed from others still accounts for the majority of the company’s annual spending. It said investment in originals accounted for more than 25% of its total profit-and-loss content budget in 2017 and will grow further, with US$17bn committed over the next “several years” and a spend of US$7bn to US$8bn on content planned for 2018.
“Our goal is to work with the best creators in the world and own the underlying intellectual property so that we can continue to deliver amazing content to our members across the globe,” it continued.
“Since 2013, we’ve taken the long-term view that we’re in the early stages of the worldwide, multi-decade transition from linear TV to internet entertainment. Recently, it’s been unfolding right before our eyes.
“Disney announced plans to launch direct-to-consumer services for ESPN and its other brands; cable network owners are licensing their channels to virtual MVPDs like Hulu, YouTube, Sling TV and DirecTV Now; CBS’s All Access is expanding internationally; Apple is reportedly planning on spending US$1bn on original content; and Amazon is streaming NFL games while its Prime Video service has gone global. Facebook launched its Watch tab for original videos.
“It’s an exciting period and both media and technology companies see the same big opportunity as we do. We have a good head start but our job is to improve Netflix as rapidly as possible.”
Netflix added more subscribers than expected in the third quarter as viewers craved its highly regarded original content and results did not show any new signs of stress, analysts said.
“We don’t see anything on the near-term horizon that is likely to materially slow this momentum,” Dougherty & Co analyst Steven Frankel said.