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Netflix and many other could sweat a lot in foreign territory on content acquisition 12 February 2015


‘s aggressive expansion plan, and as it was seen on it’s Cuban launch, could come back to hurt the white label  provider on content acquisition spending.

Analysts at MoffettNathanson said that the global licence fee structure that Netflix is taking to content creators only offers a 20-30% mark-up on the cost of show production. That’s a problem for Netflix, whose content expenses last year totaled 59% of its revenue — far ahead of cable networks. As a comparison point, MoffettNathanson said that 21st Century Fox spends 45% of its revenue on content, while Disney spends 42% and Turner spends 41%. Going forward, that percentage is set to worsen. The firm said that Netflix is estimated to have cash content acquisition costs of $4.3 billion in 2015, up 36% compared to 2014. Much of that will be a result of original content production as well: it plans to triple the number of original programming hours in 2015 to 320. Spending on originals increased from $133 million in 2013 to $243 million in 2014, and MoffettNathanson said that it would increase it further, to $450 million, in 2015.

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