Netflix’s content library now worth $12B, Morgan Stanley estimates

(Morgan Stanley)

While Wall Street analysts hem and haw about Netflix’s current fast rate of burning through cash, the No. 1 SVOD provider is seeing exponential increases in the value of its core asset: its content library. 

According to Morgan Stanley, Netflix’s program library was worth $12 billion at the end of the first quarter, more than double the $5.7 billion valuation it held at the end of Q1 2015.

Over that same span, original content has gone from accounting for just 5% of that asset valuation to 14%—Netflix original series are now valued at $1.7 billion, Morgan Stanley said. 

RELATED: Netflix's continued cash burn could be a concern, analysts say

Building this asset, of course, hasn’t come cheaply. Netflix said it will spend $6 billion on producing and licensing content in 2017—versus $4 billion for Amazon and $2.5 billion for Hulu. 

Netflix free cash flow in the just-reported second quarter came in at about $608 million, ramping up from $254 million during the year-ago quarter. The company expects free cash flow for the full year to be between about $2 billion and $2.5 billion.

“With our content strategy paying off in strong member, revenue and profit growth, we think it’s wise to continue to invest. In continued success, we will deploy increased capital in content, particularly in owned originals, and, as we have said before, we expect to be FCF negative for many years,” wrote Netflix in a shareholder letter (PDF).

The strategy is certainly driving subscriber and revenue growth.

In addition to adding a record 5.2 million subscribers during the quarter, Netflix also saw its revenues rise 32.3% and its profit rise to $66 million, up from $41 million in the year-ago quarter.

Meanwhile, critical acclaim has come along with Netflix’s sizable investment in originals. Last week, Netflix originals garnered 91 Emmy nominations, second only to HBO’s 111. Netflix’s Stranger Things captured 19 nominations all on its own.