Netflix CFO defends $6bn content spend

Netflix financial chief David Wells has claimed Netflix’s multi-billion dollar content spend is the key factor in the international SVOD service’s subscription growth.

CFO Wells reiterated Ted Sarandos’ recent admission Netflix would spend US$7 billion on shows – mostly original content such as Narcos (pictured) – in 2018, and has said spending US$20 million an hour on originals was not out of the question.

However, he told delegates at the Goldman Sachs Communacopia Conference yesterday: “In the future we might be at a point where we might start seeing more budget constraint. That has some benefits in terms of helping drive discipline on the content line.”

Many analysts and journalists have pointed to a debt pile currently sitting at around US$5 billion, mainly accrued through original content spend, as evidence of Netflix facing significant business challenges.

For the time being, however, content spend will continue to inflate provided Los Gatos-based Netflix is “able to continue to grow our global subscriber base like we think we can”, Wells said yesterday.

Netflix now has 104 million subscribers worldwide, and added a record 5.2 million in Q2, which Wells mainly contributed to getting “real scale as a producer and also having a combination of license and produced content”.

“We can pay more for a piece of content – or we can put more on the screen, if you will – for a piece of content and increasingly benefit from that global network of subscribers,” said Wells.

“We’re super excited about the potential for what that might look like in, say, five years. Is US$20 million-an-hour-television possible? Certainly, if you have the numbers of people watching it. We certainly can support that level of quality in terms of TV.”

Wells added that with the deep-pocketed Facebook and Apple becoming increasingly important buyers, Netflix was protected by its subscriber base and ability to grow business.