Netflix is the streaming platform that everyone has heard of. Want to watch a movie? Netflix. Binge some tv? Netflix. Long journey? Netflix. It’s the service that everyone thinks of first when it comes to streaming any sort of TV or film and that is quite an accomplishment. It is for this reason that it’s hard to believe that a website so successful could be facing a huge amount of debt. And by huge we’re talking in the billions.
The fact is that Netflix has been running at a loss since its conception. It is reported that by the end of 2017 Netflix would have spent a whopping near $2 billion for this year alone meaning that their free cash flow, essentially the money that they are generating, will continue to be in the negative for years to come.
The original content that Netflix is creating comes at a cost and this producing and owning of shows is something that they only seem to be doing more of. Self-producing shows (the most well-known example being Stranger Things) requires more money upfront than Netflix’s usual method of paying for licensing of originals (such as with House of Cards) and non-originals (such as popular BBC and Channel 4 content). Self-producing their own shows is a risk but money doesn’t seem like something that they’re afraid to spend given their plan on spending of $17 billion over programming in the next three years.
What are the possible consequences of this mass spending for the average subscriber however? Well, for one Netflix has taken on a more no-nonsense approach to cutting its programmes. If it doesn’t generate enough views and therefore enough money for it to be worth its keep, then out the door it goes. Through this, Netflix has already cancelled some of its more original and offbeat shows such as Sense8. It seems as though Netflix’s plan to keep the dough rolling in is, conversely, to be creating higher budget and more star-studded content to draw in subscribers. They are also branching out into more international films outside of their Californian base, a recent that comes to mind is South Korean film Okja.
From the outside it certainly looks as if Netflix is ploughing through its own resources to make content that doesn’t immediately pay them back and sustaining these losses has led the company into deep trouble, totalling at a combined long and short-term debt including obligations of $20.54 billion. Suddenly your £5 a month doesn’t seem so much.
But what does the future hold? The company remain confidence that its original content will continue to draw people in. Netflix has been rolling out some hugely popular series such as 13 Reasons Why and Riverdale as well as its quality content of Stranger Things and Orange Is the New Black. These high standard and engaging shows are more than ever becoming politically conscious and diverse, something that perhaps isn’t being seen enough on more traditional platforms. So where do you go? Neflix.
