Will Netflix’ upward momentum continue?
Hodges Funds Portfolio Manager Eric Marshall and Trading Advantage Senior Market Strategist Alan Knuckman on the future of Netflix and Apple.
Netflix CFO David Wells said he has no regrets that the company will spend $6 billion for original content despite the company's $4.8 billion debt.
Wells, speaking at the Goldman Sachs Communacopia Conference in New York Tuesday, said spending is part of growth strategy but that the entertainment giant would most likely begin restricting its budget, according to The Hollywood Reporter.
Netflix said it will be spending $6 billion to obtain and produce content this year. However, the company requires its new shows to increase in popularity first.
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Netflix has been criticized by the media and analysts for its alleged “free-spending ways” especially on its original shows, according to The Hollywood Reporter.
Wells said it was worth it especially since the streaming giant has acquired some 104 million users worldwide.
"You could decide to invest everything and more into content, so we have some discipline reserve for growing operating margin at this point," Wells said.
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"For a while, we were not budget-constrained, we were project-constrained," he continued. "We might be to the point where we might start seeing more budget constraint. That has some benefits in terms of helping drive discipline on the content line."
Despite a number of outlets becoming involved in content, including Facebook and Apple, Wells said the price “was only rising for shows in the top tier of quality while the price of lesser shows are stagnant and falling.”
"That doesn't mean that we aren't disciplined on the price. We still have walked away from some things," he said.
Variety reported that Netflix’s spending budget could increase to $7 billion next year.
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