Netflix’s Boyega Content Deal: 2 Takeaways for Investors

Big content spending has put Netflix (NASDAQ:NFLX) in debt. The company’s debt rose to $14.8 billion at the end of 2019 from $10.4 billion in 2018. The company’s content costs rose to over $15 billion in 2019 compared to $12 billion in 2018. Despite the rising debt and soaring content costs, Netflix isn’t slowing down on content investment. The company has signed a deal with John Boyega for original content. Netflix’s Boyega deal is for non-English films that focus on Africa.

Netflix’s Boyega deal, push for more international growth

Boyega is a British-Nigerian actor who played a role in Star Wars. He runs a production company called “UpperRoom.” Netflix has inked a multiyear production deal with UpperRoom to supply it with original feature films on Africa. UpperRoom, which has focused on West and East Africa, will produce non-English African content for Netflix.

Netflix’s Boyega deal increases its African content investment. Last month, the company released its first original African series called Queen Sono, which is a spy drama. The company has more content work underway in various African countries. Therefore, the deal with Boyega’s UpperRoom expands Netflix’s African content projects.

Netflix sees that Africa has a rich history. Therefore, the company wants to tell African stories to Africans and the world.

Netflix’s interest in African content comes as it pursues more international growth. There are more growth opportunities for Netflix in international markets. However, the company wants to escape tightening competition at home. The company has been struggling to grow its domestic subscriber base. Netflix will see more domestic competition following Disney+, Comcast’s Peacock, and AT&T’s HBO Max.

Growth in Africa’s subscription video market

Currently, Africa’s subscription video streaming market is small. The market generated $183 million in revenue in 2019. However, the market is expanding rapidly due to Africa’s growing Internet population, which topped 526 million people in 2019. Digital TV Research predicts that Africa’s subscription video revenue will top $1.0 billion in 2025, which shows 400% growth in five years.

Netflix’s Boyega deal and others could help the company gain a major head start against rivals like Disney in Africa. Disney+ isn’t expected to land in Africa until 2022. Netflix has enough time to build a strong foothold in Africa before Disney+ arrives there.