Netflix expands its net

The entertainment giant is expanding aggressively worldwide, while spending record sums on exclusive programming.

In 2016, Netflix expects to spend US$5 billion on programming — more than its total revenue for 2014, reports French business daily Les Échos, based on data from California market analysis firm Janney Montgomery Scott.

This expenditure will place Netflix ahead of all the large US networks and will surpass investments made by Home Box Office, Amazon and Showtime combined. The only exception is ESPN, which will still be spending more in 2016 because of the high price of certain sports rights.

a movie shot from Netflix 

Netflix already set the entertainment world abuzz when it launched its own original series House of Cards, followed by Orange is the New Black and Marco Polo, which aired in Canada in January 2015. With its US$90 million budget, the latter became the most expensive TV series in history.

Such programming expenses might seem extravagant, but they have a very simple financial rationale. "Last year our original content overall was some of our most efficient content. Our originals cost us less money, relative to our viewing materials, than most of our licensed content, much of which is well known and created by the top studios," explained Netflix CEO Reed Hastings in the company's most recent annual report.

At the same time, Netflix is expanding aggressively worldwide. It currently distributes its shows in 50 countries, but expects raise that number to 200 by the end of 2016. Along the way, it will be spending on exclusive local productions and rights purchases – all of which will account for the US$5 billion production budget predicted for 2016. In France, for example, it is producing Marseille, a series scheduled to air at the end of 2015, for the tidy sum of 8 million euros.