Analyst firm Ovum reckons Netflix’s spending on original content is unsustainable and something’s got to give.
Series such as House of Cards, Daredevil and The Crown reportedly cost hundreds of millions of dollars to produce and deliver no immediate return on investment, such as advertising and licensing deals. The only reason they’re produced is to drive up the number of Netflix subscribers, but Ovum reckons the cost is too high.
In a report entitled ‘Netflix’s Current Business Model is Not Sustainable’, Ovum says “Netflix is caught between a rock and a hard place, as it has to spend vastly increasing amounts of cash on producing original content amid a very competitive content production and licensing market, but is unable to raise prices sufficiently to make meaningful profits due to intensifying competition.”
Read more of the article here.
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