Netflix Burns Cash To Produce More Original Content, Is $20 Billion In Debt

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Considering that there are few companies that are as popular and lauded as Netflix is now in the entertainment industry, you may find it hard to believe that the video-streaming platform’s financial health is less than tip-top.

To keep producing the original content that has won it so much acclaim, it has raked up a massive US$20.54 billion in long and short-term debt—to keep revenues on the incline, the company hope to attract more subscribers.

In order to continue churning out hit TV series and movies, Netflix has been pouring money into “expensive prestige projects and expects to spend at least $6 billion in content this year”—while this investment in content may help it to stay ahead of rivals like Amazon and Hulu, experts warn of the Netflix bubble bursting if a steady stream of new subscribers fail to materialize.

As Netflix tries to increase its self-produced originals to 50% of everything that is available, it is likely that they would run into a cash flow problem where it uses a lot of money up front to create shows that can take years to pay out—this is why the company expects “to be free-cash-flow negative for many years”.

 

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(Designtaxi)