Netflix CEO Spence Neumann described a top-down and bottom-up process for determining content spend, which is expected to come in at about $18 billion in 2025 and, he said, is “not anywhere near a ceiling.”
“It’s a little art in science,” he added during a Q&A at the Morgan Stanley media conference.
On the top line, “We have a pretty good sense of predictability of our revenue. We’re primarily a subscription model. We’ve got a pretty good sense over time of the ability to kind of drive demand and revenue from our investments across the business. So we start with that, and then we also set our margin targets.”
“Then what’s left over is to spend into content. So then there’s the bottom-up exercise … as we look [at] those categories of content, across genres, across countries and regions and across original and licensed content, and where can we deliver highest impact. We’re a learning machine. So it’s fluid, it’s iterative. We look at it every quarter, every year, and iterate … It’s how in any given year that we can, in a responsible way, invest into the growth.”
Netflix has more than 300 subscribers and a massive household audience of about 700 million globally. That’s “a huge variety and quality of content [and] we also have a principle that those stories, the best stories, can come from anywhere.”
Solutions for password sharing have successfully boosted revenue and 2025 is a pivotal year for Netflix’ advertising tier.
Execs said on the last earnings call that 55% of new signups were for the ad tier, which is approaching critical scale in all of the streamer’s ad markets. The focus in this year is to monetize that reach “because our monetization has now not kept up yet with the scale.” Investment is key, in expanding first-party ad tech stack, audience measurement, and a sales operation.
Live events is a growth area too but, he insisted, as has co-CEO Ted Sarandos, that it’s a much broader category than sports.
“Live creates more appointment viewing, more conversation … We saw with the Tom Brady roast. We saw, it with John Mulaney on the talk show side. We saw it with the [Jake] Paul-[Mike] Tyson fight, with the NFL on Christmas Day, and now with WWE. We are in those big, eventized moments” that help drive subscriber acquisition and retention.
“But not all live content works for us … and being in the business of regular season, of full seasons of big sports, we haven’t found that yet to be something that we necessarily need to deliver.”
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