Netflix to hike content spend to $17 billion in 2024

Global streaming giant Netflix plans to increase content spends to $17 billion in 2024 from a lower-than-planned content spend of $13 billion in 2023 due to the double strikes by Hollywood screenwriters and actors which started in May 2023.

“As a result (of the double strikes which halted new content creation), we expect 2023 cash content spend of around $13B and, assuming the SAG-AFTRA strike is resolved in the near future, we are currently expecting cash content spend of up to ~$17B in 2024,” Netflix said in its letter to shareholders along with the Q3 result announcement.

The streamer pointed out that it is left with an additional $1 billion free cash flow in 2023 due to lower-than-planned content spends to the Hollywood double strikes by Writers Guild of America (WGA), which represents screenwriters, and Screen Actors Guild – American Federation of Television and Radio Artists (SAG-AFTRA), which represents 160,000 actors.

“We now expect FY23 free cash flow to be approximately $6.5B, up from our prior forecast of at least $5B, and vs. $1.6B in 2022. This includes ~$1B in lower-than-planned cash content spend in 2023 due to the WGA and SAG-AFTRA strikes,” the letter said.

“We want to grow the content spend just about half a step ahead of revenue to create value proposition for our members,” said Netflix Co-CEO Ted Sarandos in the earnings call. “We hope to get cash content spend back up to at or near that $17 billion level. The biggest swing factor is going to be when the SAG-AFTRA strike resolves,” said Netflix Chief Financial Officer Spencer Neumann in the earnings call.

This was the first time in 63 years that both WGA and SAG-AFTRA were on strike at the same time, bringing creation of new content to a grinding halt. The writers went on strike from May 2, while the actors joined in on July 14. They were protesting a range of issues such as better pay to protection from the threat from Artificial Intelligence. 

“The last six months have been challenging for our industry given the combined writers and actors strikes in the US. While we have reached an agreement with the WGA, negotiations with SAG-AFTRA are ongoing,” the letter said.

Also read: Netflix keeps India out of price hike strategy