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Netflix is the largest paid-subscription streaming site for films and television shows, boasting over 75 million subscribers (and countless password-moochers) worldwide. As many tech sites and consumer guides have pointed out, Netflix also happens to host the largest catalog of available content, in comparison to the remaining "Major Three": Hulu and Amazon Prime. But every few months, user searches for a specific film or show yield the dreaded "related titles." With a total revenue in excess of $6.7 billion reported after the end of Q4 2015, it would seem that Netflix doesn't have an issue with cash flow. In reality, Netflix hemorrhages money due to the exorbitant overhead of licensing titles and marketing expenses. And yet, Netflix continues to replace expired titles with others while also producing new original content.
How is this business model fiscally possible?
To be clear, Netflix does use the majority of their revenue to pay studios for licensing agreements. The Wall Street Journal reported in 2015 that of the Major Three, Netflix had planned on designating the most funds toward acquiring content – more than what Hulu and Amazon had projected on spending, combined.
In 2016, we plan to launch over 600 hours of original programming, up from about 450 hours in 2015. Beyond the sheer volume of content, the breadth of our original programming will continue to expand with current plans for new seasons of 30 or so original series (including The Crown and The Get Down), eight original feature films, 35 new seasons of original series for kids, a dozen documentaries, and nine stand up comedy specials.
We are now in our fourth year of original programming and we are putting special emphasis on shows that families can enjoy together, including the upcoming Fuller House, new seasons of Unbreakable Kimmy Schmidt, and Stranger Things. We are also stepping up our non?English language original productions, including Marseille, a French political drama starring Gerard Depardieu, and then, shows from Italy, Japan, Mexico and Brazil. We expect some of these series to gain fans well beyond the markets in which they were made.
Increasingly, our goal is to own more of our original programming to allow for greater creative and business control and to ensure global access to content.