Netflix to Increase its Annual Spending on Content

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Netflix has announced that they are willing to part with $ 8 billion that will be used on content next year. This is a $2 billion increase from what it had planned to spend this year. Netflix, which is a streaming service made this announcement during its third-quarter earnings report two days ago. During the same report, the company announced that they had increased their subscription by 5.3 million during the third quarter. At the same time, Netflix announced that they had surpassed their expectations. Also, they made a profit of $3 billion which is a 30 percent increase from what they made last year at a time like this. This means that its income had risen to $130 million in the last quarter. This was far below what the Wall Street had suggested. The Wall Street had suggested that the company would make a net income of $143 million. Trading for Netflix’s share saw an increase by 1.2 percent. This came a few days after the price of a Netflix share rose above $200 for the first time. The report confirmed that Netflix now has 104 million paying subscribers. At the same time, the report indicated that the high revenue was from the added 4.5 million new subscriptions.

Netflix announced that 25 percent of its revenue was being used for original programming. They also said that they expect the figure to grow as time goes by. Research has shown that Netflix outspends its rivals by a huge margin. Some of these rivals include CBS, FX as well as HBO. Apple has entered the market where it has set aside $1 billion for original content programming. The chief executive of Netflix Reed Hastings has said that they are taking the competitors very seriously. However, Netflix can rejoice in that some of its main competitor, Amazon Studios is facing a period of tumult after their head of content was fired for sexually harassing a woman. Amazon has also spent large chunks of money on TV shows and series that are yet to make the company some significant profits. Amazon also issued a statement saying that it had cut ties with the Weistein Company after Harvey Weistein was involved in high profile sexual harassment cases. In the past few months, Netflix has signed big names in the market such as Ryan Murphy and Shonda Rhimes. Netflix said that close to $2 billion would be used for original movie production.

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