Netflix is going even deeper into debt, in order to further fuel its original content production. Watching television is way different than it was back in the day. Waiting for next week's episode, having to deal with commercials, and paying for an extremely large cable bill aren't appealing concepts. That's why Netflix has become an absolute powerhouse. It takes away all the bad things you hate about television. However, they are having to keep up with demand, which means their standard of what they believe is good enough is extremely high.
Content is the most important thing for Netflix. Without quality content, Netflix would disappear. That's why they've decided that it's important to spend tons of money on a profit and loss basis in order to provide quality content to audiences around the globe. They want to give you more options beyond just Stranger Things, Orange is the New Black, and The Defenders. They want to progress even farther than that.
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According to Variety, Netflix is hoping to present $1.6 billion in debt in order to further the progress of its original content budget for this upcoming year. The company has a target of spending between $7 billion and $8 billion on all expanded content for 2018. At the end of their third quarter of this year, Netflix reported that they were $4.89 billion in debt, which is much more than the $3.36 billion debt from last year.
Netflix wants to grow even larger than they are now, and that requires a lot of money. If they want to become the streaming service, rather than just a preferred streaming service, then the believe they need to work on expanding their content into all different types of genres in order to appeal to a larger audience. Netflix is willing to go into debt for that overall goal. That's why the company is okay having $163 million in interest expenses on their debt in 2017 thus far, with more to come in the next few months.
With Netflix working with negative cash flow, it's obvious they are looking to be around for a long time. Instead of working towards a profit, they've chosen to work towards the growth of their company. Failure cannot be an option for this company as the consequences would be extremely harsh, due to the massive amount of debt they are currently in and plan on being in come the next year.
With all that being said, it's unlikely that Netflix will fail. They progress as a company every year and they have some of the best television shows and films around. If Netflix is willing to go into more debt to bring expanded original content to viewers, so be it.
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Source: Variety