Netflix could spend as much as $US5 billion in 2016 on programming, making it the second biggest spender on content buyer after ESPN, says Tony Wible, analyst at Janney in a new report.
He adds that it would be bigger than the “$US4.5 billion of estimated programming collectively expensed at HBO, Amazon, Starz, and Showtime in 2014. The spend builds a competitive advantage and virtuous cycle as it draws in more subscribers that allow it to afford more content. Amazon’s investment exemplifies the competitive hurdles as it is spending roughly half of what Netflix does in the US but yet Netflix is seeing 1,250% greater usage.”
Using data from Wible’s report, BI Intelligence charted out the current state of Netflix’s programming spend as compared to the programming spend of its rivals in 2014. As you can see, Netflix is way out in front.
It’s only going to go up from here, making life harder for its rivals.
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