Netflix (NFLX) stated in its 4Q15 letter to shareholders that it intends to launch 600 hours of original programming in 2016. Netflix plans to spend $5 billion on original programming in 2016. Currently, 10% of Netflix’s content spend is on original content. The company would like to increase this amount to 50%. Netflix believes that original content will continue to strengthen its brand and drive up viewing hours.
Netflix also stated in an interview with Benjamin Swinburne from Morgan Stanley (MS) and Peter Kafka from Re/code on January 19, 2016, that it believes that even if the company’s rate of spending on original content slows from 2016 onward, there will still be plenty of excellent content that can be added to its original content library in the United States. Netflix intends to continue spending on original content in the United States, albeit at a slower rate.
Original programming reaps awards
Netflix’s two original documentaries, What Happened, Miss Simone? and Winter on Fire, have also been nominated for Oscars at the upcoming Academy Awards.
Netflix’s original programming, including Jessica Jones, Master of None, Narcos, Sense8, Daredevil, and Bloodline, were rated six of the top ten new TV shows of 2015 by IMDB. Netflix also released its first movie with Adam Sandler, The Ridiculous 6, in December 2015. The Ridiculous 6 is part of Netflix’s deal to produce four movies with Adam Sandler.
This film was Netflix’s most viewed movie ever in its first 30 days. It was also the most viewed movie on Netflix in the week after its release.
According to a December 2015 Sandvine Global Internet Phenomena Report, Netflix had a 37.1% share of the peak downstream Internet traffic in North America.
As the chart above indicates, Alphabet’s (GOOG) YouTube had a share of 17.9% of downstream Internet traffic, while Amazon’s (AMZN) Prime Instant Video service and Hulu had shares of 3.1% and 2.6%, respectively.
Breadth of original programming
In 2016, Netflix intends to produce around 30 original series, eight original movies, 35 original series for kids, 12 documentaries, and nine stand-up comedy specials. Netflix produced and released its first film Beasts of No Nation last year. The company launched five new original series in 4Q15, including Master of None and Marvel’s Jessica Jones.
Netflix makes up 0.97% of the PowerShares QQQ Trust Series 1 ETF (QQQ). If you’re interested in exposure to the television and radio sector, QQQ has 4.4% exposure to that space.