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Is Netflix creating a content pricing bubble?

Is Netflix creating a content pricing bubble?
[Photo: Chesnot/Getty Images]

Netflix has a lot of money to spend and it’s not afraid to spend it. In fact, because of Netflix’s willingness to pay top dollar for its upcoming lineup of original programming, the going price for content is skyrocketing.

That’s according to a new report from the research firm MoffettNathanson. “Netflix keeps driving up prices of content, as the average price of a 1 hour drama has essentially doubled from $2-3 million only 2 years ago to the $5+ million range today,” writes analyst Michael Nathanson.

Netflix said in October it plans to spend up to $8 billion on content next year. Which is to say a content bubble may be forming–so long as Netflix keeps driving up the prices.

Meanwhile, other tech players like Apple and Amazon are also shelling out large amounts of money to invest in new content. According to MoffettNathanson, this tension between traditional media companies and these new entrants has “devolved into an open war.”

The question is: How long can this insane pricing war last?CGW