KEY POINTS

  • Wall Street firm BMO Capital Markets projected Netflix's content spending to hit $17.3 billion in 2020
  • Netflix's content spending is expected to pass $26 billion by 2028
  • BMO's report comes ahead of Netflix's fourth quarter report, which is expected to be "a solid quarter" for the streaming service

Despite increased competition from newer services like Disney+ and the upcoming HBO Max, Netflix is projected to ramp up content production in 2020 by spending more than $17 billion.

Wall Street firm BMO Capital Markets published its 2020 financial projections on Thursday. It said Netflix is forecast to invest $17.3 billion into new content, up from the $15.3 billion invested in 2019. BMO also forecast Netflix’s content spending to pass $26 billion by 2028.

The report comes ahead of Netflix’s fourth-quarter earnings report, which Cowen & Co. analyst John Blackledge said would be “a solid quarter.” This is on the back of more than 800 hours of original content released on Netflix by the end of 2019, including hit shows like “Stranger Things” and “The Witcher” and Oscar contenders “The Irishman” and “Marriage Story.”

BMO said most of the Netflix’s content budget going forward will be for original programming. The firm said this is significantly higher than competition, like Disney+ and NBCUniversal’s Peacock service, which are projected to spend around $2 billion between programming and operating costs.

However, BMO assured investors Netflix is still a worthwhile investment despite the projected spending.

“We continue to believe the ‘streaming wars’ narrative is false and there will be multiple winners in global streaming,” BMO’s Dan Salmon said in the report.

Blackledge said in his Cowen & Co. report that Netflix’s subscriber loss to Disney+ “will be manageable” compared to previous forecasts. He points to a Cowen & Co. survey from December of 2019 in the U.S. that found Netflix was still the platform consumers use most to watch TV. Netflix scored 25%, followed by basic cable with 18%, broadcast at 17%, and YouTube at 13%.

“We continue to believe Netflix will hit or exceed its U.S. paid net add guide,” Blackledge said.

Netflix Pictured is the Netflix logo and a remote control. Photo: AFP/Lionel BONAVENTURE