Netflix Announces Major Content Spending Increase for 2026
Netflix Inc., the global streaming leader, has revealed plans to significantly boost its investment in original programming for the upcoming year. The company intends to increase spending on films and television shows by 10% in 2026, a move that comes alongside its ongoing pursuit of Warner Bros. Discovery Inc.'s studio and streaming business.
Financial Performance and Cautious Forecast
The streaming giant delivered fourth-quarter results that largely exceeded Wall Street expectations, reporting sales of US$12.1 billion and earnings of 56 cents per share. For the full year 2025, Netflix achieved sales of US$45.2 billion, representing a 16% increase from the previous year.
However, the company issued a cautious outlook for the current quarter, forecasting earnings of 76 cents per share, which falls below analyst estimates of 82 cents. This conservative projection reflects the anticipated impact of higher program spending and costs associated with the Warner Bros. acquisition.
Warner Bros. Acquisition Details
Netflix is actively working to finalize its acquisition of Warner Bros. Discovery's studio and streaming divisions, a deal that would unite two entertainment powerhouses. The company recently amended its agreement to offer US$27.75 per share in cash, moving from a previous mixed cash and stock proposal.
This strategic acquisition aims to provide Netflix with access to one of the world's richest film and television libraries, content that can be leveraged for new programming and expansion into complementary businesses such as consumer products, experiences, and video games.
Financial Implications and Strategic Shifts
The Warner Bros. transaction will add approximately US$275 million in costs for the current year, on top of the US$60 million already spent through year-end. To accumulate cash for this acquisition, Netflix has announced it will temporarily pause its share buyback program.
Following the earnings announcement, Netflix shares experienced a decline of up to 5.1% in extended trading, dropping to US$82.60. This market reaction reflects investor concerns about the increased spending and acquisition costs affecting profitability.
Programming Strategy and Subscriber Metrics
Netflix spent approximately US$18 billion on programming in the previous year, with subscriber growth reaching nearly 8% to surpass 325 million users. Despite this substantial investment, the company reported only marginal increases in viewership, with overall engagement growing about 2% in the second half of 2025.
The streaming service has shifted its focus from regular subscriber updates to traditional financial metrics, encouraging investors to evaluate performance through sales growth and operating margins rather than user numbers alone.
Revenue Growth Strategies
Even as user growth and viewing engagement have slowed, Netflix has maintained double-digit sales growth through strategic price increases and the introduction of advertising-supported tiers. The company expects to implement further price adjustments in 2026 and predicts advertising sales will double this year from US$1.5 billion in 2025.
For the full year 2026, Netflix forecasts sales growth of up to 14%, potentially reaching US$51.7 billion, with an operating margin target of 31.5%.
Competitive Landscape and Content Success
The streaming market remains highly competitive, with Paramount Skydance Corp., led by technology scion David Ellison, offering US$30 per share in cash for all of Warner Bros. This creates a bidding environment that could influence the final acquisition terms.
Netflix closed 2025 with a strong programming lineup that included the final episodes of Stranger Things, a documentary series about hip-hop mogul Sean Combs, and a new Frankenstein film. These high-profile releases contributed to the company's solid fourth-quarter performance despite the broader challenges in subscriber growth.
