While competitors race to catch up with Netflix, the largest online TV service in the world is adhering to a simple strategy to maintain its lead: you have to spend money to make money.
The streaming pioneer will deploy as much as $8 billion on programming next year, a third more than in 2017. The increase alone is almost as much as HBO spends annually. Netflix, based in Los Gatos, Calif., will also pony up more than $1 billion for marketing.
The money will fund a growing array of programming designed to attract more customers. The company’s long-term budget for movies and TV shows totals $17 billion.
Critics say the spending is risky, and concerned investors sent shares down Tuesday even though the online TV service reported on Monday its best-ever third quarter for subscriber gains. The stock dropped as much as 2.4 percent to $197.77 in New York trading.
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Here’s how Netflix will spend that $8 billion.
80 original movies
Chief Content Officer Ted Sarandos said Netflix will release more original movies next year than Hollywood’s three largest movie studios (Disney, Warner Bros. and Universal Pictures) combined.
Most of these films will be low-budget projects, such as Noah Baumbach’s “The Meyerowitz Stories” with Adam Sandler and Dustin Hoffman, or Joe Swanberg’s “Win It All.” Others will be lowbrow comedies.
Yet Netflix is also starting to fund big-budget movies that would be at home on the big screen next to “Star Wars,” like the Will Smith movie, “Bright,” due out in December. By releasing more than one new film a week online, Netflix is mounting a growing threat to movie theaters by giving consumers a reason stay home.
Anime and Scandinavian thrillers
Netflix has signed up more than 56 million customers outside the United States, relying mostly on American-made shows. Now 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 released its first Italian and German series this year, and plans an increase in the number of shows it makes for foreign viewers in 2018. That includes its first Danish series (”The Rain,” a post-apocalyptic adventure), its first Swedish series (”Quicksand,” a suspenseful crime drama) and a lot of animé. The company has 30 projects based on the Japanese style of animation in different stages of development, Sarandos said.
Deals, deals, deals
Netflix bought comic book publisher Millarworld this summer, the first acquisition in the company’s 20-year history. Consider it the first of many deals. Though Netflix prefers to build rather than buy, the company said it would seek more opportunities to acquire intellectual property.
“We’re looking at a lot of things,” Sarandos said. “When there can be these kinds of efficiencies, that kind of creativity under one roof, we’ll want to explore that.” Netflix wants to claim hot book properties, top producers and new writers before rival media companies.
Teen and tween dramas
For all the money Netflix spends on its own shows, programming licensed from others still accounts for the majority of the company’s annual spending. In one of its biggest deals to date, Netflix licensed the rights last year to “Supergirl,” “The Flash” and “Riverdale” from The CW.
The CW, owned by CBS and Warner Bros., is one of the few networks to deepen its ties to Netflix in recent years. Other large media companies are taking their shows off Netflix to bolster their own streaming services.
Netflix says it isn’t concerned. Original shows now account for more than 25 percent of Netflix’s overall programming budget, and that figure will continue to grow.