How Does Netflix Make So Much Money?
Netflix had a cracking line-up of new content last month — Season 2 of 13 Reasons Why, Season 5 of Arrested Development, and four stand-up specials, amongst others. This year they plan to spend $8 billion on content, on par with media juggernauts like Time Warner (HBO) and Disney.
$8 billion is a lot of money. Where does it all go? Well, it turns out hit shows don’t come cheap:
These are non-trivial amounts of money. Are they actually worth it?
Season 1 of Stranger Things had a price tag of $50M. With Netflix making around $100/year per subscriber, it would need to see 500,000 new signups to break even. Given that 14 million people tuned in to Stranger Things in its first month, it’s pretty plausible that ~5% of them were new users that subscribed because of the show. Not only that, but a large chunk of Season 1 fans will have renewed their subscriptions in anticipation of Season 2 — all in all, it was probably worth a lot more than $50M to Netflix.
