Current Gold Rush Among Techland's Giants To Increase Content Spending Vindicates Netflix

A few months ago, it seemed like everyone and their dog were rabidly criticizing Netflix for their content spend plan. It was incessant and it was loud and extremely noisy. The phrase, "empty vessels make the most noise," was most apt at the time and probably still applies.

Since then, not only has Netflix continued with its plans for content spending but almost half a dozen of techland's best and biggest companies have announced plans to significantly ramp their own spending on content in order to build out a better and, might I say, more profitable original content offering for its customers/subscribers.

If the saying "imitation is the sincerest form of flattery" is true, then Netflix is beyond compare.

Amazon's original content spending plans for 2017 are estimated to reach about $5 billion (Street estimates range from $4 to $5 billion for 2017), just a shade under the estimated $6 billion Netflix will spend this year on its own original content development. In addition, Amazon has already started streaming Thursday night NFL games in a deal struck back in April with the NFL.

Netflix is well known for its mega-hits like House of Cards, Stranger Things and other internally developed shows, however, SVOD competitors are now not sitting idle with Amazon and its The Grand Tour and The Man in the High Castle and HBO with its Game of Thrones.

Every company that wants to be a serious SVOD player has announced increased spending on content and original programming.

HBO is estimated to spend almost $2 billion this year on its content development.

Then, we have Hulu, which will spend an estimated $2.5 billion on content this year, as per CEO Mike Hopkins. According to Hopkins, Hulu has plans to launch seven new original series in the next six months or so.

Apple said last month that it plans to spend about $1 billion in the next year or so to develop its own original content. Admittedly, Carpool Karaoke and Planet of the Apps were hardly what one would call breakaway hits, but one could have seen that coming a mile away. Apple has also hired two executives away from Sony Pictures, showing that it is serious in its effort to ramp up spending and beef-up originally developed content. There is also chatter that Apple is planning to move its original content division to the Los Angeles area by buying/leasing (yet unknown) Culver Studios in Culver City. Apple wants to move closer to Hollywood and is more than likely signaling its intent by moving closer to the action.

Google already spends more than what Netflix and Amazon spend on original content (albeit indirectly) by paying YouTube content creators a portion of revenue generated on the site. It is estimated that back in 2015, Google paid YouTube content creators more than $5 billion. Google does not break out numbers for YouTube, but its spend for 2017 could easily exceed the $6 billion that Netflix is estimated to pay for content in 2017.

Again, it's not Netflix alone that is increasing content spending but it's a whole lot of the biggest companies in tech that have realized that content is where the action is.

That does not mean that the empty vessels will not continue making the most noise about Netflix's content spending now and going forward. It only means that investors will bemuch better informed and also be better equipped to deal with the massive barrage of constant negativity.

In summation, Netflix has always been a pioneer in the SVOD/OTT area and with everyone now seemingly in a rush to allocate billions to developing and buying content, the company has been proved prescient yet again.

(Long nflx, amzn, aapl, googl, long and short options on all)

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