Can Netflix's Revenue Really Keep Up With Its Content Budget?
Netflix (NASDAQ: NFLX) gave investors a sneak peek of what's to come in 2018 when it released its third-quarter earnings last week. The streaming video company plans to spend between $7 billion and $8 billion on content next year, funding around 80 feature films and hundreds of original series episodes on top of its licensed content.
Not only is Netflix continuing to fund its international expansion, it's facing increased competition from all sorts of companies. As more companies enter the market with billions of dollars to spend on quality video content, Netflix has had to expand its budget to stay ahead. Eight billion dollars would represent a 33% increase in its content budget from this year's expected $6 billion.
During the earnings call, CEO Reed Hastings tried to put investors at ease: "Hopefully what gives investors confidence is ... we've grown the content budget, we've grown the content library, and made it better, but revenues have grown faster, which is what's driven the profit improvement and the marginal improvement over the years."
Source: Fool.com
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