Netflix Plans to Inject $8B on Content in 2018

The largest online TV service in the world Netflix Inc. announced its plans to spend up to $8 billion, or 6.2 billion pounds, on content in 2018, as part of a push to have 50% of its library be originally-produced content.

The amount, which was issued during the company’s quarterly earnings release on Monday, marks a significant leap from the $6 billion, or 4.5 billion pounds, planned for this year. The increase, as much as a third more than in 2017, alone is almost as much as HBO spends yearly.

The Los Gatos, California-based streaming service will also spend more than $1 billion in marketing, the report said.

According to other reports, this comes at a time when the big powers like Disney have made decisions to pull content from Netflix, shifting it into their own ecosystems. It looks like Netflix wants to fight the risk of more third-party content owners pulling their licenses, not to mention the competition from Amazon-produced original content.

Two of the areas that are getting a big investment are movies and anime. The streaming giant wants to release around 80 original films next year and 30 new anime series, Ted Sarandros, chief content officer for Netflix said. It has been pushing anime content in its library, from imports like Attack on Titan to the original series like Neo Yokio.

Most of these films will be low-budget projects like those seen at film festivals or local art-house theaters, 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.

The money will finance an ever-growing array of programming designed to attract even more customers. While critics say the spending is dangerous, investors approved the plan. Thus, it also worries rivals who are under pressure to up their own programming outlays while still increasing profit. Investors have permitted Netflix to borrow and burn through cash to fund its growth while punishing media stocks such as CBS Corporation and Walt Disney Co as they have lost viewers or advertisers.

“We have a good head start, but our job is to improve Netflix as rapidly as possible […] to stay ahead of the competition in the decades to come,” the company said.

The company also recently announced it would be raising subscription fees in the U.S. and U.K., with tiers that were previously 7.50 and 9 pounds per month jumping to 8 and 10 pounds, respectively.

During the quarter, Netflix signed a production deal with Shonda Rhimes, creator of hit shows including “Grey’s Anatomy,” and made its first-ever M&A deal for Millarworld, the home of comic book writer Mark Millar.

Netflix shares jumped to a new high on Monday after the online TV service reported its best-ever third quarter for subscriber gains. The company’s long-term budget for movies and TV shows totals $17 billion. It increased as much as 4.1% to $211 in extended trading after the announcement before easing to $205.20. The stock gained 1.6% to $202.68 at the close in New York and is up 64% this year.

Third-quarter net income more than doubled to $130 million, or 29 cents a share, the company said on its website. Revenue increased 30% to $2.99 billion, beating estimates. Total streaming subscribers surged to 109.3 million.

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