Entertainment Internet Technology Explained

How Does Netflix Make Money?

Mihir Patkar 26-12-2017

Netflix is the biggest video streaming service in the world today. It serves 190 countries with over 109 million users, with movies and series in 21 languages — and all without ads ruining your viewing experience.


So how exactly does Netflix make any money?

The service is full of fantastic TV shows, be it Stranger Things or Black Mirror. As a viewer and subscriber, you surely want to know how Netflix plans to keep serving more episodes of your favorite shows. Let’s find out.

How Does Netflix Make Money?

Netflix’s main source of revenue is subscriptions, which cost between How Much Is Netflix per Month? How much is Netflix? What plans are available? Here's a look at how much money Netflix could cost you each month. Read More $7.99 and $13.99 per month. This totals to about $950 million per month, according to the company’s earnings report [No Longer Available]. It also earns about $30 million per month through DVD rentals. The profit, or net income, is approximately $43 million per month.

how does netflix make money

Overall, the company earned $8.83 billion in total revenue in 2016, and is on track to make over $11 billion in total revenue in 2017. Netflix does not make any money through advertisements or commercials in its streaming service


How Much Does Netflix Make in a Day?

Around $1.4 million per day.

Netflix is cagey with numbers about its daily operations, or about how much content is being viewed. The best estimate is from the company’s reported earnings, which showed $130 million net income in Q3 2017 (i.e. $1.4 million per day).

how does netflix make money

This is only an approximation though and not a real figure. Plus, it keeps changing based on every quarter’s earnings report. But it’s safe to say this trend should continue, as Netflix expects more net income in the next quarter.


How Much Does Netflix Pay for Content?

It depends on the show, movie, or deal, but Netflix says, “We will spend $7-8 billion on content (on a P&L basis) in 2018).” The company also has $17 billion in content commitments over the next several years.

how does netflix make money

This is total spending, though, which includes both licensing fees and original programming. Netflix has been a champion of original TV series 15 New Netflix Originals You'll Be Watching in 2017 Netflix is now producing its own original content. And some of the new Netflix Originals set to debut in 2017 definitely look like they'll be worth watching. Read More , and those cost the company differently.

The Get Down became the costliest TV series ever made, with a budget of $120 million. The two biggest current hits are also quite expensive. Stranger Things season two cost $8 million per episode, while The Crown season two cost $10 million per episode.


How Much Does Netflix Spend on Original Movies?

Here are the costliest movies Netflix has made so far:

  • Bright (2017): $90 million
  • War Machine (2017): $60 million
  • Okja (2017): $50 million
  • Death Note (2017): $40-50 million
  • The Irishman (2018): $100 million

But these are exceptions, either due to a major star or director, or because it was based on a famous franchise. Bright stars Will Smith, while The Irishman is a Martin Scorsese project. On average, Netflix makes films on much smaller budget. For example, the Angelina Jolie film First They Killed My Father has a reported production cost of $22 million.

As a new entrant in the movie production market, expect a few more hits and misses as Netflix tries to find movies you’ll love How to Find Netflix Movies You Will Love Netflix has a huge library of content. Which is why you need to know how to find movies you're guaranteed to love. Thankfully for you this article is packed with tips. Read More .

Is Netflix Losing Money and Making Losses?

Technically, yes. Netflix’s Free Cash Flow (FCF) was around -$2 billion in 2017. The company currently has a total gross debt of $4.8 billion. That said, it is making profits each quarter, and they are growing.


how does netflix make money

Netflix says the debts are part of its strategy, as it continues to grow its original content. It’s a “spend money to make money” outlook, as Netflix tries to get people hooked to its service. If people look forward to one new show or movie every month, they are more likely to subscribe and/or continue subscriptions to the service. The strategy seems to be working, as the company is consistently adding 5 million subscribers every quarter.

When certain movies or TV series don’t justify the cost, Netflix cancels them. Over the past year, it has cancelled great original programs Netflix Keeps Cancelling Its Best Original Shows Netflix has cancelled Girlboss after just one season, having previous cancelled The Get Down and Sense8. So it seems Netflix is ruthlessly canning any show that doesn't find an audience. Read More like The Get Down, Girlboss, and Sense8.

Is Netflix’s Business Model Sustainable?

The jury is still out on whether Netflix can keep doing what it is doing. So far, the company’s executives and shareholders are happy with the business model.

how does netflix make money

It helps that Netflix has a proven track record of changing with the times. While it started out as a DVD rental company, its early foray into streaming video has borne fruit. Today, while the company still rents DVDs and Blu-rays, that is a tiny part of its business.

Plus, Netflix regularly passes on the cost of good content to its subscribers. The company’s standard plan was first hiked to $8.99 (from $7.99) in 2014, then to $9.99 in 2016, and $10.99 in 2017. And despite higher prices, the subscriber base has only increased, showing that Netflix is worth the money Is Netflix Worth The Money? There are more people who don't subscribe to Netflix as those who do, and that swathe of the population wants to know if they're missing out on anything. Is Netflix worth the money? Read More . Expect more hikes in the future.

Will Netflix Be Bigger Than TV?

To us the consumers, here’s what matters right now: Netflix is a profitable, stable company that should be around for the next 5-10 years. It only offers monthly plans, so there is no risk of you getting a long-term subscription and losing that money. So sit back and binge-watch the best shows The A-Z of Netflix: The Best TV Shows to Binge-Watch Looking for TV shows to binge-watch on Netflix? Here are the best series that are gripping, thrilling, and won't let you take a break. Read More .

Do you think Netflix will last and become bigger than TV as we know it today?

Related topics: Media Streaming, Netflix, Online Video.

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  1. solo
    October 5, 2018 at 4:25 pm

    Wow, Thanks alot. Really informative and enjoyable to read. Again, thanks alot.

  2. dragonmouth
    December 26, 2017 at 9:55 pm

    "Netflix is worth the money"
    That could be argued when it comes to content quality. However, it is cheaper than paying for cable, especially for pay per view.

    "Do you think Netflix will last and become bigger than TV as we know it today?"
    Even if Netflix does not get bigger in terms of numbers, it will get bigger than TV in comparison. TV/cable is losing subscribers left and right.

    • rafael
      December 29, 2017 at 1:11 am

      Possible it will be bigger than tv in comparison for the next 10 years like cable subscription loosing each subscribers.

      • midnightrider
        January 3, 2018 at 2:20 pm

        Cable companies are hemorrhaging customers at an increasing rate. AT&T say the writing on the wall. That si why they offering streaming service. A great variety of channels at a far cheaper rate than cable service. No set top box. The last item to make this a perfect package is the ability to record and watch later. I am sure that is coming down the pipe.