Netflix is planning to significantly increase its content spending to $17 billion in 2024, which comes as a response to the disruption caused by the double strikes among Hollywood writers and actors in 2023. This increase in content spending is notable, especially considering the context of nearly 15% price increases in many important territories.
The streaming giant is looking to make up for the content production disruptions caused by the strikes. The strikes, initiated by the Writers Guild of America (WGA) and the SAG-AFTRA, resulted in a lower-than-planned content spend of $13 billion in 2023. However, they have left Netflix with an additional $1 billion in free cash flow in 2023 due to these lower content spends.
In an earnings call, Netflix Co-CEO Ted Sarandos mentioned the company’s strategy of growing content spending slightly ahead of revenue to create value for its members. The goal is to bring cash content spending back up to the $17 billion level. The resolution of the SAG-AFTRA strike is a crucial factor in achieving this target.
It’s essential to note that the price increases in various territories could provide Netflix with additional revenue that may contribute to its increased content budget. But, it is a pain to the subscribers and everyone must acknowledge this simple fact.
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