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Just when it looked safe to get back in the water for Hollywood’s struggling media companies as their streaming services finally began making money, Netflix threw more chum in the water.
Netflix, alongside YouTube the biggest shark in the content ocean, has been chomping on the bottom lines of Hollywood studios with its own seemingly bottomless supply of programming from around the world. Now the streaming giant says it will spend 11% more this year, said Chief Financial Officer Spencer Neumann at an investor conference Wednesday.
The news likely puts more pressure on streaming competitors such as Disney, Warner Bros. Discovery, Paramount Global and Comcast to keep up, even as they have struggled to make their big investments in subscription streaming services pencil out. Part of the budget balancing over the past two years but most of the competing streaming services has involved significant cuts in original programming. That’s saved money but also has likely fed rising subscriber churn and related marketing costs.
At the same time, investors coolly received news of significantly more content spending from Netflix. In a market week on pace for the worst in two years, with investors rattled by the Trump Administration’s many fights and initiatives, Netflix share prices dropped more than 8% on Thursday.
Netflix shares, which had been on an epic run the past year, fell briefly below $900 a share and remain far below the last year’s recent high of $1,064.
That said, Netflix may not be done with more content spending. Neumann told the investor conference that an $18 billion spend this year is “not a ceiling,” after spending $16.2 billion in 2024.
For the past few years, the company has spent “around $17 billion” as its executives have put it, on content programming, far more than most of its competitors’ spending on shows other than sports and news.
Last year, Netflix actually moved away from its traditional antipathy toward sports rights and live events, and uncorked several popular (if sometimes technically imperfect) live, sports-related events. Chief among those were two NFL games on Christmas day and the one-off Jake Paul-Mike Tyson “boxing” exhibition. The first week of 2025, the company began carrying weekly WWE Raw pro wrestling evenings.
Separately, MoffettNathanson analysts led by Robert Fishman issued a research note Thursday reiterating their “neutral” rating (equivalent to a hold), and a target price of $850, well below even Thursday’s depressed share price. The note was not focused on Neumann’s comments; rather it dissected the company’s recent release of broad viewership data for its shows during 2024’s second half.
“It is likely Netflix has a few more quarters of strong subscriber growth driven by its content slate and ad-(supported) tier, but we do expect the benefits of the password-sharing crackdown to slow,” MoffettNathanson wrote.
The company topped 301 million subscribers at its last earnings call, but also said it will stop reporting subscriber additions going forward. The 24 million subscribers the company added in the second half of 2024 were partly attributed to the company’s global crackdown on password sharing, forcing those who wanted access to the company’s programming to actually pay for it, rather than using, say, a distant family member’s password, or that of a former roommate.
The 94 billion hours of watch time the company accreted in the second half of the year was flat compared to the first half, but still “represents engagement that is well ahead of competitors,” MoffettNathanson wrote.
Their calculation acknowledges a 6% drop in average daily engagement, but “it is clear from the sub growth that Netflix’s password-sharing crackdown has successfully reduced the number of users per subscription,” Fishman’s team wrote. “This implies that the elevated level of global subscriber growth for Netflix does not represent as significant an expansion of its user base. Rather, it is leading to Netflix (very successfully) improving the monetization of its existing userbase.”
So, more trouble for the competition, and more confusing signals from investors worried, perhaps, the wrong things among Netflix’s numbers. Using Nielsen figures to roughly estimate engagement, MoffettNathanson suggested it dropped “modestly…Even with the slight step-back, Netflix is still well ahead of every other SVOD platform both in terms of total engagement and the average engagement per user.”
The challenges for competitors are several. Netflix’s initial success with live events and sports are “the start of something big.” And while original programming proved less engaging than any previous release of viewership data, the company’s licensing of finished shows from other providers hit a new high.
And unlike the dice roll that is an original show, acquiring library shows, such as 2023’s hit run of Comcast-created Suits, feature far less risk and the chance to use the Netflix distribution and promotional machine to its fullest across the planet.
“In 2H24, the algorithm worked its magic once again directing global attention to Prison Break, a series that aired its most recent season in 2017 on Fox following an eight-year hiatus,” MoffettNathanson wrote. “Three of the show’s five seasons ranked among the 20 most watched titles on the platform in 2H24.”
That might be happy news for the licensing divisions of competing media companies, but yet another sign of continuing mayhem ahead for the production studios within those companies. They’re just likely to get less business than they used to. At least the numbers suggest that Netflix doesn’t need an exclusive window with a show to make it go big again.
What’s not working on Netflix? “Everything in between,” i.e., older shows on Netflix’s own previous slates. “Content gets old real fast,” MoffettNathanson wrote, as soon as a few months after release. Perhaps, as some have suggested, it’s time for Netflix to start licensing out its own library content to other distributors. Now, wouldn’t that be something to see?
