For the last several years, a lot of media commentary about Netflix has depicted the streaming company as an all-powerful colossus, one that has seriously disrupted motion picture and television distribution and exhibition. It essentially put video stores out of business, and many in Hollywood are said to fear that Netflix will bring about the end of the movie industry as we know it.

Netflix is powerful culturally, too, having brought the world such series as House of Cards, Orange is the New Black, and Stranger Things, which have penetrated the cultural zeitgeist and won Emmy and Golden Globe awards. Netflix’s original movies haven’t broken through quite as well, but the recent Okja was its best-received movie to date, and Netflix has several documentaries that could be Oscar contenders this year.

The service has begun to invest in even more high-profile movies, like Will Smith’s Bright and Martin Scorsese’s The Irishman. Netflix  has become the top destination for stand-up comedy specials, and even lower-brow fare, like Adam Sandler’s original movies, have been hugely lucrative for the company.

Worldwide, Netflix has over 100 million global subscribers, compared to around 20 million five years ago. Their stock is soaring, they posted $66 million in profit in the most recent quarter, up 50 percent from a year earlier. So overall, Netflix appears to be in good shape, having emerged from nowhere to become an indispensable part of the entertainment industry firmament, one that has changed the way people consume entertainment in a way that no company has in decades.

So what’s this we hear about Netflix being hundreds of billions of dollars in debt?

According to a Los Angeles Times analysis, Netflix has accumulated $20.54 billion in long-term debt. Most of that is money that Netflix has borrowed in order to produce high-end original content.

Tony Hannah 13 Reasons Why Netflixs Success & Billion Dollar Debts Explained

Does this huge amount of debt mean Netflix is in trouble? In the short term, no. Longer term, it could be, if it for some reason loses subscribers in any major way. But that doesn’t look like it’s any major threat to happen in the near future.

Netflix remains in the DVD-by-mail business, but its bread and butter remains its streaming service, and for that, its business model is fairly simple: Netflix earns revenue from subscriptions. It spends money on its technological infrastructure, as well as the streaming rights to catalog movies and TV shows and, more recently, on original programming, which it acquires in some cases and self-produces in others.

Most movie and television studios, with which Netflix competes, are backed by major corporations, such as Disney, News Corp., Comcast, Sony and Viacom. Netflix  is not, but in order to compete with those that are, it needs to spend, a lot, and spending means borrowing and taking on debt – such as the $500 million in credit it took on last month. Amazon, which has also been known for taking on lots of debt, is also an independent company, albeit much larger and well-capitalized than Netflix.

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It’s not rare for companies, especially younger ones, to take on large amounts of debt, while counting on a high stock price and investor confidence.  And the company expects to be in debt for a long time, as CEO Reed Hastings said on the most recent investor call, as cited by the LA Times:

That’s a lot of capital up front, and then you get a payout over many years,” Chief Executive Reed Hastings said in a recent investor call. “The irony is the faster that we grow and the faster we grow the owned originals, the more drawn on free cash flow that we’ll be.”

As a result, Netflix said it expects “to be free-cash-flow negative for many years,” meaning it will continue bleeding cash for the foreseeable future.

That debt, and the desire to cut costs, may be part of the reason why Netflix has recently begun cancelling shows, like Sense8 and The Get Down, something it used to rarely do.

Yes, $20 billion sounds like a lot of money, and it is. But Netflix made $2.79 billion in revenue in the most recent quarter. And since Netflix is a public company, and has been since 2002, investors know about the debt, and at least so far, haven’t appeared all that bothered by it, if that stock price is any indication.

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Some analysts quoted by the L.A. Times have differing views on what Netflix’s debt means, and what constitutes their best way forward. Michael Nathanson, senior research analyst at MoffettNathanson, says that Netflix’s best bet is to invest in blockbusters in the Marvel tradition, rather than prestige fare. Clement Thibault, a senior analyst at Investing.com, recently said that Netflix’s stock is overvalued and may soon face a market correction that causes the stock to “trend sideways, or even downward,” over a period of several years.

What could make Netflix run into trouble, and for its large debt load to actually become a problem? It would likely require some type of total collapse of its business model, the bleeding of millions of subscribers (as is currently happening with another Netflix competitor, cable companies) and sudden unwillingness of top creative talent to work with them. Either that, or the emergence of some new competitor or technological innovation that would kill Netflix the way Netflix killed Blockbuster.

None of those things appear likely anytime soon. Sure, Amazon and Hulu have begun closing the gap on content, but neither is any threat to take Netflix out. There’s no indication of any new competitors or changing tech paradigms rising to take it on, either. They’re continuing to land top programming, and even more importantly, investors are happy. Netflix’s stock hit a yearly high on July 26, and is barely off the pace as of today. And once again the company has been posting positive revenue numbers.

So in other words, Netflix is doing okay, for now, and will likely continue to do okay for the foreseeable future. If it has a downfall, it will probably happen years from now, and due to factors not yet on the horizon.

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