Perhaps the biggest revelation from last Thursday’s earning call with CEO Reed Hastings is the admission that Netflix is “ready to pay top-of-the-market prices for second-run content.”
Netflix will spend $12 billion on licensing and producing content in 2019, a doubling from just 20 months ago. This massive spending increase is largely fueled by junk bonds on the backside of an astronomical stock valuation.
The licensing fees paid by Netflix will spike this year to stave off rising competition from Hulu, Amazon and new streaming contenders NBCUniversal, WarnerMedia, and Disney.
Increased competition is creating enormous opportunities for content creators and rights holders to licensing content to more streaming services while demanding larger payments. Get access to highly sought-after licensing rates and terms from Netflix.
Competitor, Partner… Both?
Last week, NBCUniversal announced a new ad-supported streaming service to launch in 2020. Decisions about licensing content to other providers will be made on a case-by-case basis.
NBCUniversal has an ongoing licensing agreement with Netflix until 2021.
Likewise, WarnerMedia extended the availability of Friends to Netflix despite having the opportunity to pull the popular show for use on its own streaming service launching later this year.
These new services being launched by WarnerMedia and NBCUniversal risk irrelevancy by continuing to accept licensing fees from Netflix.
Disney is the only provider pulling all its content from Netflix, including titles from Marvel, Lucasfilm, Disney Animation, Buena Vista and Pixar. Disney’s content exclusion will coincide with the launch of its new streaming service Disney+.