Netflix Content Spending, Set to Hit $18 Billion in 2025, Is ‘Not Anywhere Near a Ceiling,’ CFO Says

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In simple terms, Netflix anticipates spending around $18 billion in cash for content by 2025, and they believe there’s a lot of room for growth in the coming years, as stated by Netflix’s Chief Financial Officer, Spencer Neumann.

In regard to our content expenditure, Neumann stated during the 2025 Morgan Stanley Tech, Media & Telecom Conference that we’re far from hitting a limit. As a worldwide entertainment company, he emphasized, “I believe we have only just begun.” This year’s projected $18 billion cash investment in content would represent an approximately 11% increase from the $16.2 billion spent in 2024.

Inquired about the method Netflix uses to estimate their content budget, Neumann replied that it’s a blend of intuition and data analysis. They initially consider their projected income, which they have a fairly accurate forecast for, according to him, and then they adjust their spending on content based on the need to meet their profit margin objectives.

As of the end of 2024, Netflix boasted a worldwide membership of 301.6 million paid users, marking a significant leap from the previous year. This equates to more than 700 million individuals consuming Netflix content, according to Neumann. Despite this progress, he noted that Netflix remains relatively modest compared to industry standards within the broader entertainment sector. Globally, Netflix is found in approximately 40% of connected TV households and accounts for just 6% of its potential market share, as per the CFO. In the U.S. and other regions, Netflix still represents less than 10% of total television viewership.

Neumann expressed that potential for expansion can be found in all directions. It’s a matter of identifying the most significant area for growth and investment. Our goal is to remain in a state of growth rather than maintenance, for as long as we can.

Netflix aims to provide “increasing amounts of entertainment for every dollar spent,” according to Neumann. Additionally, they’re dedicated to enhancing the total user experience as the competition is also advancing at a similar pace.

Netflix caters to a wide and varied international audience, offering a variety of TV shows and films spanning numerous genres and styles, created in over 50 countries. In 2025, Netflix will bring back three of its most significant English-language scripted series – “Squid Game,” “Wednesday,” and “Stranger Things” – which represent their most developed content category. Furthermore, Netflix’s investment in licensed content is increasing, while live events are a growing area that the company is only beginning to develop.

Bela Bajaria, in her role as chief content officer, has established a worldwide production unit, Neumann mentioned. For productions not based in the U.S., it’s crucial that they begin with a strong, local resonance through genuine storytelling. If these stories are compelling, they may occasionally gain traction beyond their initial markets, as demonstrated by the Korean drama “Squid Game.

YouTube is increasingly dominating the television viewing market over Netflix, but according to Neumann, this doesn’t necessarily mean they are directly competing. Instead, he refers to it as a non-zero-sum game. He suggests that Netflix primarily aims to capture time spent on entertainment that neither platform has previously dominated – traditional TV time. Furthermore, Neumann emphasized that Netflix sets itself apart from YouTube because it shares in the creative and financial risks with its content creators. He believes Netflix is the premier destination for the world’s top storytellers and creators.

Regarding Netflix’s interest in live sports broadcasting, Neumann stated that they aim to continue being part of significant, highly-anticipated events such as the NFL games on Christmas Day and weekly WWE wrestling matches that began streaming this year in the U.S. “We enjoyed the NFL on Christmas Day, Beyoncé Bowl, it was successful,” he said. As for acquiring an NFL Sunday afternoon games package, Neumann mentioned that while they don’t rule out such possibilities entirely, it’s not something they are planning in the immediate future.

In Q4 of 2024, Netflix announced they’d gained approximately twice as many new global subscribers (18.9 million) than anticipated by analysts. For the whole year, their total number of new subscribers exceeded 41 million, representing a significant jump from the 29.5 million added in 2023.

Netflix increased their projected revenue range for 2025, now expecting it to fall between $43.5 billion and $44.5 billion, which is an increase of $500 million compared to their previous estimates. Additionally, they raised their expected operating margin to 29%, which is one percentage point higher than the previously forecasted figure.

In January 2025, Netflix increased its prices across all plans in both the U.S. and various other markets. This move signified Netflix’s strong pricing authority as a subscription streaming service. In the U.S., the standard ad-free plan saw an increase of $2.50, going from $15.49 to $17.99 per month, marking the first price rise for this tier in three years. Additionally, Netflix introduced its initial price hike for the ad-supported tier, which now costs $7.99 per month in the U.S., an increase of $1 from its previous rate of $6.99.

Globally, Netflix users watched over 94 billion minutes of content during the second half of 2024, marking a 5% increase compared to the same period the previous year. The streaming giant reported that “Squid Game” Season 2 was their most-watched series, attracting approximately 87 million views. However, no single title made up more than 1% of the total viewing time on Netflix during that period; for instance, “Squid Game 2” accounted for just 0.7% of the viewing time in the latter half of the year.

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2025-03-06 02:47