Is Netflix Poised To Spend $5 Billion In 2016? This Managing Director Thinks So

Netflix, Inc. NFLX has not only revolutionized the TV viewing experience, it is also changing the way content is produced.

However, that comes at a cost. Tony Wible, managing director at Janney Capital, recently released a note in which he concluded that Netflix could spend as much as $5 billion in 2016.

Following the note, Wible was on CNBC to discuss why he thinks Netflix is going to spend that kind of money on content in the upcoming year.

Competitive Advantage of Netflix

“The company has been pretty consistent about what it has been spending every single month on its subscribers, and we think the subscriber base just continues to grow around the globe,” Wible said.

“I think what the people really don’t appreciate – what gives us confidence that you are going to see a $5 billion spend – is that that is the competitive advantage.”

“The competitive advantage is making it very difficult for anybody else to want to be in this game. Amazon is probably the next highest spender in the [...] space. They are spending half what Netflix is spending, but Netflix is seeing 1,250 percent greater usage. So, even if you allocate billions, [it] doesn’t mean you are going to be as good as Netflix.”

Who Do You See As Netflix’s Biggest Competitor- Amazon Or Traditional Cable Content Providers?

“It’s Netflix versus the traditional, in the sense that since 2010 we kind of flipped and we said that traditional TV ecosystem has its issues because of Netflix. I think, traditional TV's woes actually help Netflix out,” Wible said.

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“Here is Netflix with $5 billion ready to spend to help compensate for the fact that content costs are also rising, in part because of Netflix.”