Netflix lowers content budget amidst dominant streaming competition

• Netflix had a great year in 2018, producing blockbuster TV programmes and movies.
• Variety claims that the streaming juggernaut spent a small fortune.
• Less than 4.9% of the company’s spending, or $17.70 billion.

Despite expenditure declining in 2022, Netflix had a great year in 2018, producing blockbuster TV programmes and movies.

Variety claims that the streaming juggernaut spent a small fortune on both TV material and film content, underscoring the need for financial restraint.

Less than 4.9% of the company’s spending, or $17.70 billion, or $16.84 billion in cash, went on content in the prior year.

In addition, the amount of streamer payments for content obligations for the purchase, licencing, and production of content over multiyear periods decreased from the previous year by 5.7%, from $23.16 billion to $21.83 billion.

The company projected a “sustained” upward trajectory in free cash flow as a result of its consistent content spending and other cost-cutting initiatives, such as layoffs and slower recruiting.

“Now that we are a decade into our original programming initiative and have successfully scaled it, we are past the most cash-intensive phase of this buildout,” Netflix said in its Q4 2022 letter to shareholders.

“As a result, we believe we will now be generating sustained, positive annual free cash flow going forward.”

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