Netflix Seeking Funds To Potentially Invest In More Original Content
News has come out that Netflix has announced a plan to seek out $800 million of new debt which will add to their current outstanding amount of $2.37 billion. Company executives stated that the new debt is to be used for “general corporate purposes” which means that they could spend the funds on any number of things including, but not limited to, investments, capital expenditures, and content acquisitions.
Netflix’s aim is to have 50% of their catalogue being original properties. $6 billion, that’s the number that the company projects they will be spending in 2017 on their own content- now that’s a lot of green. In 2016, Netflix paid out $14.4 billion in content obligations for both licensed and original content.
Over the last few years, Netflix has cemented itself as a media giant and a force to be reckoned with. It’s only legitimate competition on traditional television right now is HBO and AMC. With network cable providers reporting astronomical cable subscription cancellations as of late, it’s clear that Netflix has set its sight on changing the game and their plan seems to be working.
The question is this, can the company continue to gain momentum and subscribers? Will the binge watching, get all the episodes of a season all at once model continue to draw people in? As Netflix continues to up the ante with their properties, the risk to cost ratio shifts. Take their smash hit Stranger Things for example. The first season of the show had a relatively modest budget and it was rated by more than 200,000 members on IMDB, but on the other hand, their most ambitious property in terms of budget, The Get Down, cost $120 million and was only rated by 10,000 IMDB members. It’s clear the company is still testing the waters in terms of responsible property investments, but the thing people have to realize is that Netflix can’t afford to invest in multiple properties for a gamut of audiences – they have to find a middle ground for all their subscribers and play to that.