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For Netflix, Original Content Is the New Black

Netflix plans to significantly boost its original content library in 2017

January 19, 2017

As it digs into markets around the globe, Netflix is doubling down on its original content production, with plans to unveil dozens of new programs in the first quarter.

US Netflix Viewers, 2015-2020 (millions, % of OTT video service users and % change)

The programming was announced as Netflix reported that revenue grew 41% to $2.35 billion in the fourth quarter of 2016. The company also said it added 7.05 million new members globally.

Netflix made a variety of moves in the quarter—including a deal with Comcast that put Netflix on the Comcast set-top box, and the addition of offline viewing. Both advances had some revenue implications, but not a significant effect on its business—at least not the same way original content has.

Netflix plans to significantly boost its original content library in 2017. The company expects to spend $6 billion in 2017 on new content, both acquired and original, and it will expand total programming hours to 1,000 from 600 last year.

Stakes are high. Not only for Netflix, but for all players in this area as more consumers shift from traditional TV to digital video.

"As Netflix pursues this strategy, it will face growing competition not only from other full-episode players like Hulu and Amazon, but also from YouTube and Facebook, both of which have signaled their intentions to go deeper on long-form premium content," said eMarketer senior analyst Paul Verna.

eMarketer estimates that Netflix will have 128 million viewers in the US this year, up 6.6% from last year. While the company's growth slows in the US, it is moving to establish itself in multiple markets around the world.

"Although user growth is starting to slow down to single digits in the US we expect consumer engagement with Netflix to continue to increase; driven by successful investment in original programming; increased access to their service through different platforms including cable providers and smart TVs; and an overall increase in consumer time spend with digital video," said Martin Utreras, vice president of forecasting at eMarketer.

—Rimma Kats

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