Hollywood 2020: Netflix Will Invest $17 Billion in Content

Netflix, the giant streamer, will invest about $17.3 billion this year in content on a cash basis, according to a new forecast by Wall Street firm BMO Capital Markets. That figure is up from the $15.3 billion in 2019.

Netflix is not expected to ease up. Its content spending will top $26 billion by 2028, per BMO’s report. On an amortized P&L expenditure basis, Netflix’s content spending will be about $11.1 billion in 2020, the analyst firm predicts.

Netflix’s fourth-quarter 2019 earnings report will become public on Tuesday, January 21, after market close.

Investors will be reading the tea leaves for how Disney Plus and Apple TV Plus, among the first entrants of new subscription VOD rivals, affected Netflix’s subscriber growth in the year-end period.

“We continue to believe the ‘streaming wars’ narrative is false and there will be multiple winners in global streaming,” BMO’s Dan Salmon wrote in the research note. The analyst continues to maintain “buy” ratings on the stocks of Netflix, Amazon and Disney together.

For Q4, Netflix is expected to turn in “a solid quarter,” Cowen & Co. analyst John Blackledge wrote in a note Thursday. In the year-end period, Netflix debuted a record 802 hours of original programming (up 3% year-over-year), including Oscar contenders “The Irishman” and “Marriage Story.”

The effect of Disney Plus on Netflix’s U.S. subscriber churn “will be manageable” relative to previous guidance, Blackledge added: “We continue to believe Netflix will hit or exceed its U.S. paid net add guide.” He also pointed to Cowen’s December 2019 U.S. survey finding Netflix continues to be the top pick when consumers were asked which platform they use the most to view content on TVs: Netflix led with 25% of total respondents, followed by basic cable (18%), broadcast (17%) and YouTube (13%).

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