Netflix Plans 10% Increase In Content Spend As Q4 Earnings Show Continued Growth

Netflix released its Q4 2025 investor letter this week and followed it with a video earnings call. Neither focused heavily on animation, but as one of the world’s largest producers and distributors of animated content, Netflix’s broader business decisions tend to ripple through the industry.

Against the backdrop of its ongoing attempt to acquire key assets from Warner Bros. Discovery, Netflix used the update to deliver a clear message to investors: the business is still growing, and advertising is becoming a meaningful second source of revenue.

In its shareholder letter, Netflix said it met or exceeded all of its 2025 financial goals, generating $45.2 billion in revenue, up 16% year over year, and expanding its operating margin to 29.5%. In the fourth quarter alone, revenue rose 18%, and the company crossed 325 million paid memberships worldwide.

On the earnings call, co-CEO Greg Peters stressed that Netflix’s longer-term ambitions are built on organic growth, not acquisitions, a clear nod to the pending Warner Bros. deal.

Those goals were based on organic progress. They did not contemplate or assume any M&A… Ad sales [grew] by two and a half times in 2025. We expect that business to roughly double again in 2026 to about $3 billion.

The company’s literature repeatedly framed overall engagement as healthy, but emphasized that health can’t be measured solely by raw viewing hours. Peters argued that “all hours of engagement are not the same,” saying the company is increasingly focused on viewing quality because it drives retention and customer satisfaction.

For creators, the streamer’s strategy signals two things. First, Netflix expects to keep investing in programming, while staying careful about how it spends. The company said content costs will rise by about 10% in 2026, but it plans for that spending to grow more slowly than revenue overall. Netflix is also forecasting $51 billion in revenue next year, up 14% from 2025, suggesting it can keep commissioning lots of new shows and movies without going back to the heavy spending that defined its early years.

Second, Netflix is widening its menu. Executives pointed to more international live events, the launch of video podcasts, and continued expansion of cloud-based games that can be played directly on TVs.

The studio also reiterated that it is “working really hard to close” its planned acquisition of Warner Bros. Studios and HBO, which co-CEO Ted Sarandos described as “a strategic accelerant.” The deal would significantly expand Netflix’s production infrastructure and content library, especially in animation. But that’s something we’ve covered at length in other articles, and will continue to do as the deal moves along.