27 SEP 2021

Netflix could dedicate half of its spending on originals by 2025

By 2014, about 6.8% of Netflix's spend came from new orders, and increased to about 37.8% of the budget in 2020. As the streamer focuses more on new content, Kagan expects that to grow closer to 50% by 2025.

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Following a rough year for productions and swelling competition in the streaming space has necessitated an increased program budget for Netflix in this and the coming years. For 2021, S&P Global Market Intelligence’s Kagan media research unit forecast that the company could amortize about US$13.60 billion in total costs, including US$5.21 billion positioned for originals.

The launch of new subscription video-on-demand players, such as The Walt Disney Company's Disney+, AT&T's HBO Max, Comcast's Peacock and ViacomCBS's Paramount+, resulted in swaths of content being held back as each looks to populate their own services. Kagan expects that distributors will continue to reserve rights for their own SVOD services, more so from territories where they are soon to launch. However, some rights deals have lengthy contracts and would either require buying out the contract or waiting for it to expire.

Netflix has prepared for this trend since entering the originals market in 2012 as it expected studios would eventually hold back programming. By 2014, about 6.8% of spend came from new orders and increased to about 37.8% of the budget in 2020. As the service focuses more on new content, Kagan expects that to grow closer to 50% by 2025.

While it highlighted that the company had a significant amount of content ready at the beginning of the pandemic, but production delays affected the latter half of 2020 and persisted into early 2021, Kagan emphasized that Netflix continues to concentrate on scripted series and movies with the highly anticipated return of many shows, such as “The Witcher” (season 2), “Stranger Things” (season 4) and the film “Red Notice” coming in the next several months.