Netflix has announced it will devote a staggering $A7.8 billion to filming original content in 2017 – over a billion more than it will spend this year.
The streaming giant made the pledge in its quarterly report released on Tuesday. It followed the earlier revelation that Netflix expects to spend $A6.49 billion on original programming in 2016.
The global company has been widely praised for its commitment to producing original content, rather than relying on pre-existing movies and TV shows alone.
Popular Netflix originals included House of Cards, Orange Is the New Black, Unbreakable Kimmy Schmidt, Making a Murderer and Narcos.
The large 2017 budget for original shows is contingent on sufficient 2016 profits. Recent forecasts make any cut to this funding unlikely.
Early in April, a Morgan Stanley survey found American customers voted Netflix the “best” original content media company out of all premium TV or internet video subscription services, Variety reported.
This was a significant achievement given that this position had been dominated by established media company HBO.
Netflix announced in early 2016 that it had surpassed 75 million paying subscribers worldwide.
Cinema Blend reported a survey taken following the Morgan Stanley poll, that found Netflix subscribers in the US rated its original content higher than its syndicated programming.
Netflix’s syndicated content includes a vast library of classic television programs, movies and documentaries.
While Fortune magazine noted the Netflix share price had tumbled of late on the US stock exchange, predictions for the service were not dire. Forbes argued that compared to the traditional movie industry, Netflix operated with a much safer strategy.
This is because the company operates with a more predictable revenue stream owing to its subscription model.
It meant the company could predict its income better than a movie, which might spend big but then unexpectedly flop in cinemas.
Another Netflix rival bites the dust
On the same day Netflix increased its spend on original content, Australia’s first online streaming service Quickflix was placed into voluntary administration.
Its founder and chief executive Stephen Langsford blamed rival streaming service Stan and its part-owner Nine Entertainment for the demise.
Stan holds a stake in Quickflix through redeemable preference shares (RPS) acquired by Nine in 2014 from US cable TV firm HBO.
“Despite Quickflix being first to the streaming market and holding a leadership position in 2014, ongoing growth has required capital for continued investment in content and marketing,” Mr Langsford said.
“Neither Nine Entertainment nor Stan have ever participated in any capital raisings to assist Quickflix’s growth and its ability to raise capital from any source has been constrained by the RPS.”
Quickflix, which once counted News Corp co-chairman Lachlan Murdoch among its investors, faced tough competition since global streaming giant Netflix launched in Australia a year ago.
Quickflix shares were suspended from trade on the ASX in August last year. Quickflix has appointed Ferrier Hodgson as administrators.