Tuesday is a big day for Netflix, Inc. (ticker: NFLX) investors and “House of Cards” fans. The fifth season of the Golden Globe Award-winning series was released today as Netflix continues to pour money into developing original content.
According to Statista, Netflix will spend $6 billion on content in 2017. The company intends to increase its mix of original content to 50 percent of its total library within the next several years.
“We’re going to continue to invest in original content because that’s something we can influence and control and customers love it,” CEO Reed Hastings says. “So think of that as our big, long-term future.”
Netflix is doing everything it can to capture as much of the cord-cutter market share as possible by providing compelling original content, such as “House of Cards,” that viewers can’t get anywhere else. Netflix is specifically targeting the high-growth market in India, spending an estimated $300 million on India-focused programming.
While $6 billion in content costs may seem like a huge number, Amazon.com (AMZN) is breathing down Netflix’s neck in terms of video content spending. Amazon will reportedly spend $4.5 billion on content for Prime Video this year, a 67 percent increase from its 2016 content budget.
With Netflix stock up more than 1,500 percent in the past five years and Amazon’s stock hitting $1,000 per share for the first time on Tuesday, long-term investors are pleased with the aggressive spending plans up to this point.
MKM Partners analyst Rob Sanderson recently said Netflix has “more than able opportunity” to maintain its robust international growth for years to come. Sanderson also raised his price target for Netflix stock to $195.
Loop Capital analyst David Miller predicts…
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