Netflix CFO hints content spending could get more cautious

Image: Netflix

Netflix CFO David Wells said his company’s nearly unparalleled content spending could become more cautious, particular as competition increases for top content.

Speaking today at a Goldman Sachs investor conference, Wells said Netflix could possibly become more budget constrained in the future, but as long the company is able to grow the top-line and operating margin, it will continue to invest in content.

As more competitors like Amazon, Apple and Facebook look ready to spend big money for top-tier content, Wells said the bidding for that content is getting higher. He said that you have to have confidence that you’re going to monetize it effectivelyconfidence he said Netflix gets from its subscribers totalsbut he insisted that Netflix is still disciplined on price.

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When bidding on content, Wells said Netflix considers the cost and compares it to how similar content has already performed in order to determine the efficiencies Netflix can expect.

“If there’s more competition for top-tier content, we may end up producing one less show,” Wells said.

Wells’ comments seemingly had a positive effect on Netflix stock, as shares rose nearly 2% while he was speaking.

Netflix, of course, has been one of the most aggressive companies in terms of spending on content. Its $6 billion content budget for 2017 puts its ahead of SVOD rivals like Amazon Prime Video and premium programmers like Time Warner’s HBO.

While Netflix continues to spend heavily on content, the threat of price increases for the services continues to loom. When asked directly about future price increases, Wells was careful to not specifically point to when prices would increase, but instead frame his answer around building more value into the platform.

“Pricing for us is about slow and steady growth,” said Wells, adding that as Netflix adds more value to its platform, people become more amenable to price increases.

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