Netflix plans on spending roughly $6 billion over the next year on new content, making the streaming service one of the highest spending media companies in the content creation category.
CNBC states that Netflix is currently in second place among TV network and subscription organizations. The Boston Consulting Group estimates that ESPN will spend $7.3 billion on 2016 content. The majority of ESPN’s expenses come from live TV viewership due to sporting events.
“Now that Netflix has got more and more into this content production and away from being a content distributor – and they were a first mover and had some advantages – it gets more and more difficult,” said Trip Miller, Gullane Capital Partners managing partner. Miller believes because of the sheer number of content creators in business today, it’s difficult to figure out which programs will be the most successful.
As far as the Internet goes, a medium that ESPN is quite active on as well, Netflix is the single largest bandwidth user on the web. Netflix currently accounts for roughly 38% of all online traffic during the peak evening hours.
Many Netflix shows are able to do things that conventional networks can’t allow because they provide much more freedom to the creators of each program.
“They’re in the more unpredictable business of making programming that people love,” said Paul Verna, eMarketer senior analyst. “Although there are ways to improve your chances and create more successful content, there’s no formula.”
In this most recent quarter, Netflix earned roughly $2.47 billion in revenue and is the first streaming service in history to ever report earnings of more than $2 billion. Amazon is currently the fifth biggest spender on content and the second of all streaming services.