HBO CEO Richard Plepler said "Rights are getting more expensive" in an interview from 2017 (https://www.cnbc.com/2017/10/16/netflix-earnings-how-much-is-netflix

HBO CEO Richard Plepler said "Rights are getting more expensive" in an interview from 2017 (https://www.cnbc.com/2017/10/16/netflix-earnings-how-much-is-netflix-spending-on-content.html https://www.cnbc.com/2017/10/16/netflix-earnings-how-much-is...) Paying out more money for licensing when they don't own the content is like paying rent; it doesn't net you any money in the future, and the market (and your own strength in it) determines your negotiating position, so you may have to pay more to keep showing it later. Streaming companies like Netflix and Amazon realized this and began producing original content years ago, with costs going toward longer term profits, reduced licensing costs, and increased subscribers of exclusive content. Over 85% of Netflix's new spend in 2018 was on original content, and that year it produced more movies than all major movie studios combined. Not only is licensing content expensive, but an exclusive license is prohibitively expensive; generating the content yourself and keeping it exclusive is a way to attract subscribers and not lose as much cash, and retain have a long-term investment. This year, Netflix is estimated to spend 15 billion on original content alone. In 2018, Netflix spent 15 billion on content (ballooning up from the 8 billion it estimated before that year began). Compare to 2016 when it spent over 5 billion on content, and 2012 when it spent just 2 billion. Each year they've spent more on content, in part because the licensing is getting more expensive, and in part to produce such a big corpus of original content. But at the same time, its content library has shrank by more than half. They offset this loss of content by leaning on their recommendation algorithm to maximize the content viewed by users. Compare to HBO, which generally has had marginal increases in content licensing fees. It does this by making nearly all of its TV programming original, and licensing films. Netflix is essentially following HBO's model, but more so. As even more evidence, Comcast and Disney are moving toward original and exclusive content. Disney is buying Comcast's stake in Hulu, after it recently bought FOX's rights. And NBC plans to put out its own streaming service, where it will probably keep its own content exclusively after 2024. https://www.fool.com/investing/2016/06/20/netflix-inc-content-costs-are-booming-but-its-libr.aspx https://www.fool.com/investing/2016/06/20/netflix-inc-conten... https://www.investopedia.com/articles/investing/062515/how-netflix-pays-movie-and-tv-show-licensing.asp https://www.investopedia.com/articles/investing/062515/how-n... https://www.forbes.com/sites/danafeldman/2018/07/09/netflixs-content-budget-is-updated-to-13b-in-2018/ https://www.forbes.com/sites/danafeldman/2018/07/09/netflixs... https://variety.com/2019/digital/news/disney-full-control-hulu-comcast-deal-1203214338/ https://variety.com/2019/digital/news/disney-full-control-hu...