Netflix recently announced its plan to spend about $6 billion on content for 2016. The company plans to use 50 percent of the budget to create over 600 hours of original content this year.
Netflix recently disclosed that it currently has over 70 million subscribers across the globe, including 43 million American viewers. As of 2016, Netflix is available in 130 countries and regions around the world.
This is a great business strategy on Netflix’s part that is beneficial to both the business and its subscribers. Most of Netflix consists of content that has already been aired or screened — there is not much programming that is unique to it. With the addition of original content, the company is making the subscription service more worthwhile for those who want to see fresh, new content.
Netflix is also popular because it allows users to watch entertainment on demand. There are not many safe and legal streaming sites that allow people easy access to their favorite shows and movies.
And for college students especially, Netflix has become more relevant than broadcast television. Netflix costs as little as $8 a month. This is much cheaper than the cost of buying a television and paying for basic cable. It is also more convenient because students can stream content on almost any smart device. This is a luxury you cannot get with television unless you pay a lot more per month for a cable subscription, and even then the selection is limited to the channels you are subscribed to.
So far, one of Netflix’s biggest competitors in paid streaming on demand is Amazon. Amazon Prime costs $99 for a year-long subscription with perks including limited free video streaming, free two-day shipping and free music streaming. This comes out to $8.25 a month. Students eligible for the student discount pay only $50 for a year long subscription, making each month $4.17. Customers can also pay extra for access to newly released movies or shows.
In 2014, Amazon spent $1.3 billion on their Prime Instant Video service. In contrast, Netflix spent $3.2 billion for content, including content licensing and content production in that same year.
Hulu Plus is another competitor, offering streaming services for $7.99 per month as well, or $11.99 without commercials. Their selection of videos tends to be more recent television shows have have just aired.
Of all the services, Netflix offers the most variety in content. It was estimated in 2015 that Netflix had approximately 25,000 titles in their library while Hulu Plus offered approximately 10,000. Amazon only had 5,000 titles to choose from. While the quality of all of that content is questionable, there’s certainly no doubt that Netflix’s selection vastly exceeds that of its competitors.
All of the streaming services offer a limited amount of original content. Netflix has put out successful shows like Orange is the New Black and House of Cards, and saw a steady increase in their amount of subscribers.
The amount of money Netflix is investing is almost double the amount spent two years ago. The $6 billion will contribute to an even larger selection of popular movies and television shows. It is clear that Netflix wants to remain ahead of the other streaming services by drawing in new subscribers, and keeping its old with its larger selection of movies, shows and original content.