Owning the Shows, Not Renting ThemNarrow moat

Netflix (NFLX) — moat facet

Netflix owns most of its content assets but still pays more to amortize licensed shows than its own, so it is halfway from renter to owner.

Netflix began streaming in 20071 by renting other studios' libraries. It has since become a studio in its own right: produced content was $20,639.8 million of its $32,778 million of content assets at the end of 20252, and it had $9,211 million of its own shows in production3.

Content amortization by type ($M)7,145Licensed 20237,052Produced 20238,714Licensed 20257,709Produced 2025Netflix Form 10-K FY2025
Licensed still the larger half.

Owning matters because rented content can be taken away. A studio controls its titles in every country, keeps them indefinitely, collects tax incentives, about $1 billion in 20254, and builds franchises such as KPop Demon Hunters5.

The transition is not finished. In the income statement, licensed content still cost more than produced in 2025: $8,714 million against $7,708.6 million of amortization6. Netflix is still buying heavily from the studios it competes with, and it has signed new licensing deals with Universal and Sony7. Owned content also depreciates fast: over 90% is amortized within four years8.

Owned shows also earn beyond the service. Netflix has opened Netflix Houses in Dallas and King of Prussia9, where fans can visit settings from its own titles. A licensed show cannot be turned into a venue; an owned one can, which is why ownership matters more as Netflix builds a brand business around its hits.

Netflix also licenses its way into new categories while building its own. It is bringing video podcasts from iHeartMedia, Spotify's Ringer and Barstool onto the service10, a form of licensing that costs little and fills hours. The ownership strategy is aimed at the expensive, distinctive titles that recruit and keep members; licensing still fills the rest of the catalogue.

The verdict is a narrow moat that is widening. The number to follow is licensed amortization's share of the total, 53% in 202511. When produced content costs more than licensed each year, Netflix will be a studio that licenses rather than a licensee that produces.

Moat trajectory: Widening

Produced assets 63%; licensed still 53% of amortization.

The number that tests this moat
Moat Explorer calc
Licensed share of content amortization, full year
53% (2025: $8,714M of $16,422M)

Dependence on other studios; a share below 50% would mark the move from licensee to owner.

How it's calculated: Licensed content amortization ($8,713.6M) divided by total content amortization ($16,422.2M) in 2025, from the FY2025 10-K.
Source: Moat Explorer calculation from Netflix filings ↗
Aspects of the moat
DIG DEEPER 01
Produced Content: $20.6 Billion on the Balance Sheet
Netflix owns $20.6 billion of produced content, which it controls in every country for as long as it likes.
DIG DEEPER 02
KPop Demon Hunters: The Most Popular Film Ever
KPop Demon Hunters spent more than a year in Netflix's Global Top 10, showing what owning a hit is worth.
DIG DEEPER 03
Tax Incentives Worth $1 Billion a Year
Tax incentives cut about $1 billion a year from Netflix's produced-content costs, and its scale lets it film wherever they are richest.
DIG DEEPER 04
$9.2 Billion in Production Right Now
Netflix had $9.2 billion of its own shows in production at the end of 2025, a commitment few rivals can make years in advance.
⚠ Threats to the moat
⚠ THREAT 01
Licensed Content Is Still the Larger Half
Netflix still spends more amortizing other studios' shows than its own, and the licensed share grew in 2025.
⚠ THREAT 02
Paramount and WBD Become One Supplier
By losing Warner Bros. to Paramount, Netflix helped create a larger studio that it both licenses from and competes with.
References
  1. ReportedNetflix began streaming in 2007 by renting other studios' libraries.
    Netflix second-quarter 2026 shareholder letter, Form 8-K exhibit 99.1 - quarterly results, regional revenue, 2026 guidance, view hours, live programming and advertising - programming, engagement, live events and product. — Q2 2026 · publ. 16 July 2026 · source ↗
  2. ReportedIt has since become a studio in its own right: produced content was $20,639.8 million of its $32,778 million of content assets at the end of 2025, and it had $9,211 million of its own shows in production.
    Netflix Form 10-K for fiscal 2025 - content assets, amortization and content obligations notes. — FY2025 · publ. 23 January 2026 · source ↗
  3. ReportedIt has since become a studio in its own right: produced content was $20,639.8 million of its $32,778 million of content assets at the end of 2025, and it had $9,211 million of its own shows in production.
    Netflix Form 10-K for fiscal 2025 - content assets, amortization and content obligations notes. — FY2025 · publ. 23 January 2026 · source ↗
  4. ReportedA studio controls its titles in every country, keeps them indefinitely, collects tax incentives, about $1 billion in 2025, and builds franchises such as KPop Demon Hunters.
    Netflix Form 10-K for fiscal 2025 - content assets, amortization and content obligations notes. — FY2025 · publ. 23 January 2026 · source ↗
  5. ReportedA studio controls its titles in every country, keeps them indefinitely, collects tax incentives, about $1 billion in 2025, and builds franchises such as KPop Demon Hunters.
    Netflix third-quarter 2025 shareholder letter, Form 8-K exhibit 99.1 - the Brazil tax charge, the ads plan in 12 markets, US and UK view share and KPop Demon Hunters. — Q3 2025 · publ. 21 October 2025 · source ↗
  6. ReportedIn the income statement, licensed content still cost more than produced in 2025: $8,714 million against $7,708.6 million of amortization.
    Netflix Form 10-K for fiscal 2025 - content assets, amortization and content obligations notes. — FY2025 · publ. 23 January 2026 · source ↗
  7. ReportedNetflix is still buying heavily from the studios it competes with, and it has signed new licensing deals with Universal and Sony.
    Netflix fourth-quarter 2025 shareholder letter, Form 8-K exhibit 99.1 - 325 million paid memberships, 2026 guidance, advertising revenue, named competitors, content licensing and the pause in buybacks. — Q4 2025 · publ. 20 January 2026 · source ↗
  8. ReportedOwned content also depreciates fast: over 90% is amortized within four years.
    Netflix Form 10-K for fiscal 2025 - content assets, amortization and content obligations notes. — FY2025 · publ. 23 January 2026 · source ↗
  9. ReportedNetflix has opened Netflix Houses in Dallas and King of Prussia, where fans can visit settings from its own titles.
    Netflix fourth-quarter 2025 shareholder letter, Form 8-K exhibit 99.1 - 325 million paid memberships, 2026 guidance, advertising revenue, named competitors, content licensing and the pause in buybacks. — Q4 2025 · publ. 20 January 2026 · source ↗
  10. ReportedIt is bringing video podcasts from iHeartMedia, Spotify's Ringer and Barstool onto the service, a form of licensing that costs little and fills hours.
    Netflix fourth-quarter 2025 shareholder letter, Form 8-K exhibit 99.1 - 325 million paid memberships, 2026 guidance, advertising revenue, named competitors, content licensing and the pause in buybacks. — Q4 2025 · publ. 20 January 2026 · source ↗
  11. Moat Explorer calcThe number to follow is licensed amortization's share of the total, 53% in 2025.
    Moat Explorer calculation from Netflix's reported financial statements, shareholder letters and market data ($ millions unless stated). Content amortization / revenue: 14,026.1 / 31,615.6 = 44.4% (2022); 14,197.4 / 33,723.3 = 42.1% (2023); 15,301.5 / 39,001.0 = 39.2% (2024); 16,422.2 / 45,183.0 = 36.3% (2025); Q2 2026 4,311.3 / 12,559.9 = 34.3%. Revenue growth 2022-2025: 45,183.0 / 31,615.6 - 1 = 43%; 2025 45,183.0 / 39,001.0 - 1 = 15.9%. Operating income 13,326.6 / 5,632.8 = 2.4 times. Gross margin (45,183.0 - 23,275.3) / 45,183.0 = 48.5% (2025); (33,723.3 - 19,715.4) / 33,723.3 = 41.5% (2023). Q3 2025 operating margin excluding the Brazil charge (3,248 + 619) / 11,510 = 33.6%. Additions to content assets Q2 2026 4,927.5 / 3,835.8 - 1 = 28%. Cash content spend = additions less change in content liabilities: 16,839.0 - 179.3 = 16,659.7 (2022), 12,554.7 + 585.6 = 13,140.3 (2023), 16,223.6 + 779.1 = 17,002.8 (2024), 17,096.6 + 610.8 = 17,707.5 (2025); ratio to amortization 16,659.7 / 14,026.1 = 1.19, 13,140.3 / 14,197.4 = 0.93, 17,002.8 / 15,301.5 = 1.11, 17,707.5 / 16,422.2 = 1.08. Licensed share of amortization 8,713.6 / 16,422.2 = 53%; licensed growth 8,713.6 / 7,689.0 - 1 = 13.3%; produced growth 7,708.6 / 7,612.5 - 1 = 1.3%. Produced share of content assets 20,639.8 / 32,778.4 = 63%; content assets / amortization 32,778.4 / 16,422.2 = 2.0 years. Tax incentives / produced amortization 1,000 / 7,708.6 = 13%; tax incentives / operating income 1,000 / 13,326.6 = 7.5%. Employees outside UCAN 16,000 - 10,900 = 5,100. Capex / revenue 688.2 / 45,183.0 = 1.5%; capex growth 688.2 / 439.5 - 1 = 57%. Free cash flow = operating cash flow less capex: 10,149.3 - 688.2 = 9,461.1 (2025); 7,361.4 - 439.5 = 6,921.8 (2024); 7,274.3 - 348.6 = 6,925.7 (2023); FCF / revenue 9,461.1 / 45,183.0 = 20.9%; FCF / net income 9,461.1 / 10,981.2 = 86%; capex / FCF 348.6 / 6,925.7 = 5.0%, 439.5 / 6,921.8 = 6.4%, 688.2 / 9,461.1 = 7.3%. Buybacks / FCF 9,127.2 / 9,461.1 = 96%; buybacks 2024 + 2025 6,263.7 + 9,127.2 = 15,390.9; diluted shares 4,261 / 4,349 - 1 = -2.0%; remaining authorization 27.1 / 296.24 = 9%. Year-end P/E = market value / net income: 213.10 / 5.408 = 39.4 (2023), 381.00 / 8.712 = 43.7 (2024), 397.29 / 10.981 = 36.2 (2025), trailing 296.24 / 13.650 = 21.7. Net debt / equity end 2025 (14,462.8 - 9,033.7 - 28.7) / 26,615.5 = 0.20; interest / operating income 776.5 / 13,326.6 = 5.8%; termination fee / 2025 net income 2,800 / 10,981.2 = 25%; ROE 10,981.2 / ((26,615.5 + 24,743.6) / 2) = 43%; net income growth 10,981.2 / 8,711.6 - 1 = 26%. Pre-tax income 2025 10,981.2 + 1,741.4 = 12,722.6, one point of tax rate = 127; six points = 763. UCAN ARM 17.20 / 15.86 - 1 = 8.4%; UCAN net additions 80,128 - 74,296 = 5,832 (2023), 89,625 - 80,128 = 9,497 (2024); paid memberships growth 301,626 / 260,276 - 1 = 16%; top plan price 37 / 32 - 1 = 15.6%. Obligations: due in 12 months / revenue 11,528.0 / 45,183.0 = 25.5%; obligations / debt 25.1 / 14.3 = 1.75; off balance sheet 18.4 / 24.0 = 76% (end 2025), 19.6 / 25.1 = 78% (June 2026). Advertising: 1.5 / 45.2 = 3.3% of 2025 revenue; 3.0 / 51.2 = 5.9% of the 2026 guidance midpoint (51.0 + 51.4) / 2 = 51.2. Nielsen gap 13.8 - 8.0 = 5.8 points. Regions: 2025 shares UCAN 19,957.2 / 45,183.0 = 44.2%, EMEA 14,514.6 / 45,183.0 = 32.1%, LATAM 5,357.5 / 45,183.0 = 11.9%, APAC 5,353.7 / 45,183.0 = 11.8%; Q2 2026 UCAN 5,432 / 12,560 = 43.2%. UCAN growth 14,873.8 / 14,084.6 - 1 = 5.6% (2023), 17,359.4 / 14,873.8 - 1 = 16.7% (2024), 19,957.2 / 17,359.4 - 1 = 15.0% (2025). EMEA memberships 101,133 / 76,729 - 1 = 31.8%; APAC memberships 57,541 / 38,023 - 1 = 51.3%; APAC revenue 5,353.7 / 3,570.2 - 1 = 50%. UCAN share of 2022 streaming revenue 14,084.6 / 31,469.9 = 44.8%. Memberships 2022-2024: UCAN 89,625 / 74,296 - 1 = 20.6%, LATAM 53,327 / 41,699 - 1 = 27.9%. ARM gap UCAN less APAC 15.86 - 8.50 = 7.36 (2022), 17.20 - 7.29 = 9.91 (2024). H1 2026 revenue 24,809.7 / 51,200 = 48.5% of the guidance midpoint. Diluted shares 4,343,863 / 4,494,966 - 1 = -3.4%. Average buyback price Q2 2026 4.7bn / 52.93M shares = about $89; 2025 9,127.2 / 86.54M shares = about $105; 71.15 / 105 - 1 = -32%. Analyst target 92.93 / 71.15 - 1 = 31%. US revenue 18.5 / 13.8 - 1 = 34%. Hedging swing 124 - (-91) = 215. Revenue 2023-2025 45,183.0 / 33,723.3 - 1 = 34%; employees 16,000 / 13,000 - 1 = 23%. Q2 net income 3,401 / 3,125 - 1 = 8.8%. DVD revenue = total revenue less streaming revenue: 33,723.3 - 33,640.5 = 82.8 (2023); 31,615.6 - 31,469.9 = 145.7 (2022) - regional revenue, memberships and viewing share. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Netflix's Forms 10-K and 10-Q, shareholder letters, Nielsen's May 2026 Gauge and market data; operands shown in the source line.
Sources
Generated September 26, 2026