Netflix is increasing its annual programming budget to $21 billion, a 12% rise from 2025, as it intensifies efforts to secure content from Warner Bros. Discovery. The move is expected to reduce operating margins to below 18% in 2026, reflecting a strategic pivot toward long-term market dominance.
- Netflix’s 2026 programming budget increases to $21 billion, up 12% from 2025.
- Operating margin expected to drop below 18% in 2026 due to higher content costs.
- Company plans to add 12 million net subscribers in 2026, driven by new content.
- Strategic focus on acquiring Warner Bros. Discovery assets to expand IP portfolio.
- Increased spending reflects long-term push for competitive advantage in streaming.
- Shares fell 3.5% in after-hours trading despite positive subscriber outlook.
Netflix is accelerating its content acquisition strategy by raising its annual programming investment to $21 billion for 2026, up from $18.7 billion in the previous year. This aggressive spending surge underscores the company’s intent to strengthen its content library ahead of potential integration with assets from Warner Bros. Discovery, which has been under review for strategic realignment. The shift comes amid heightened competition in streaming and a growing demand for exclusive programming across global markets. The increased outlay will compress Netflix’s operating margin, projected to fall below 18% in 2026—down from a high of 24% in 2023. Despite this, management maintains that the long-term outlook remains favorable, citing strong subscriber growth and improved retention metrics in key regions such as Latin America and Southeast Asia. The company expects to add 12 million new subscribers in 2026, driven largely by expanded original productions and regional partnerships. Market analysts note that the content spend increase signals Netflix's willingness to absorb short-term profit pressure in exchange for enhanced content depth. With Warner Bros. Discovery facing restructuring challenges, Netflix is positioning itself to acquire major intellectual property and production capabilities, including film libraries and popular franchises like DC Comics and Harry Potter. These assets are seen as critical to sustaining subscriber engagement beyond current hit series like 'Stranger Things' and 'Squid Game'. Investors have reacted cautiously, with Netflix shares dipping 3.5% in after-hours trading following the announcement. However, institutional investors remain supportive, highlighting Netflix’s proven ability to monetize content through global distribution and multi-platform licensing deals.