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Oct 25, 2017
30,076
Tampa
https://www.thefader.com/2017/07/31/netflix-20-billion-debt
Netflix's enormous spending on original content has led the streaming video platform to accrue $20.54 billion "in long term debt and obligations," according to a report in the Los Angeles Times.


The company is expected to spend $6 billion on original content this year, with an undetermined budget spent on licensing fees for programs from TV studios. Its net cash outflow will increase this year to $2.5 billion, up from $1.7 billion, and the company expects "to be free-cash-flow negative for many years."

Investors seem content with Netflix's financial game plan, and are hopeful that debt financing will "create growth" in the short term. The company has continued to build its base of subscribers paying for the service (104 million, up 25% from 2016) and gather critical acclaim for original shows – its programming won 91 Emmy nominations last year spread over 50 shows.

However, some industry experts are warning of a "Netflix bubble" if the platform's original content fails to keep attracting users. "I think they're going to need some luck in not drowning in debt in the ultimate slowdown of growth," said media consultant Mike Vorhaus, while analyst Michael Pachter warned of "a looming write-down."
 

Deleted member 1041

User requested account closure
Banned
Oct 25, 2017
10,725
Uh

Why have they spent 20 billion on things. I get having to spend money to make money, but is that theory proven on subscription services?
 

principal

Attempted to circumvent ban with alt account
Banned
Feb 14, 2018
1,279
Debt is good if you can facilitate it. Look at Japan. Netflix is doing it the smart way.
 

ILikeFeet

DF Deet Master
Banned
Oct 25, 2017
61,987
I guess this could hurt them if some shit happens, but as long as they can maintain a stable subscription base, I don't think anyone's too worried right now
 

Josh5890

I'm Your Favorite Poster's Favorite Poster
The Fallen
Oct 25, 2017
23,229
I can see why they dont want to pay for live sporting events
 

ElectricBlanketFire

What year is this?
Member
Oct 25, 2017
31,857
MST3K Season 12 will fix this.

9da.gif
 

Fat4all

Woke up, got a money tag, swears a lot
Member
Oct 25, 2017
92,906
here
thats only gonna get bigger the more of a subscriber base they have for a while

they want to maximize growth, be the market before disney can take too much of it away
 

Illithid Dude

Member
Oct 26, 2017
1,363
Tbh I hope Netflix fails and people go back to paying for movies in theaters. We simply get better films that way.
 

Pein

Member
Oct 25, 2017
8,235
NYC
Uh

Why have they spent 20 billion on things. I get having to spend money to make money, but is that theory proven on subscription services?
They have to spend when everybody is making their own streaming services and taking their content away.

I still find Netflix to be valuable because of their original content like the new Sabrina show and elite.
 

Illusion

Banned
Oct 27, 2017
8,407
I agree with the concern, I don't see how they plan to monetize further to get out of debt. Right now it just seems like their doubling down on content to scare competitors off and or be able to stand on their own until these other services die off.
 

DevilMayGuy

Member
Oct 25, 2017
13,577
Texas
Their long term gross debt is only $8ish million, up from $5ish million in 2016 and 17
They're a publicly traded company that divulges all sorts of data quarterly and annually. Debt isn't automatically a bad thing
 

DevilMayGuy

Member
Oct 25, 2017
13,577
Texas
God damn between this thread and all of the thinly veiled console warrior stock threads on gaming side, this forum should stick to gaming and politics and leave the stock market to CNBC
 

B-Dubs

That's some catch, that catch-22
On Break
Oct 25, 2017
32,776
Debt isn't necessarily a bad thing, it's in all how you use it.
 

Sandfox

Member
Oct 25, 2017
24,743
That article is more than a year old and things actually seem to be going well for Netflix.
 

Rivenblade

Member
Nov 1, 2017
37,127
I love Netflix. Hope they last a long time and get in the black at some point. Otherwise, there's no other streaming service that provides what they do on my Roku.
 

Deleted member 32374

User requested account closure
Banned
Nov 10, 2017
8,460
Has there been a massive selloff of netflix stock due to loss of revenue and an unsustainable debt load?

July 2017 article btw. Hey, I like Hulu too but netflix isn't going anywhere.
 

Jessie

Member
Oct 27, 2017
9,921
This has already been addressed a million times. Netflix has "cheap" debt, meaning that it's actually more valuable for them to go into debt and instigate explosive growth, than it is to grow slowly using green cash flow.
 
Oct 25, 2017
3,789
You cannot organically grow a tech-centric consumer business, you basically have to take on massive debt. At this point, it's rather unclear if companies like Netflix and Uber will be able to dig their way out. People forget there are real oligopolies, just because the titans compete among each other, there is very little real value in early to mid-stage tech, it's all heavily debt funded because otherwise they will be squished like bugs. It's not a healthy model.
 

B-Dubs

That's some catch, that catch-22
On Break
Oct 25, 2017
32,776
This article is from July 2017 and is out of date as a result. If you want to remake the thread with a more up to date article then feel free.
 
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