Netflix and chill? More like Netflix and crippling debt.
According to the LA Times, despite an all-time high of 104 million subscribers and 91 Emmy nominations for their original shows, Netflix still accumulated over $20 billion in long-term debt, or $15.7 billion according to an update on Vibe. Either way, ouch.
With pressure from streaming rivals Amazon and Hulu to continue to create original content, Netflix is set to spend up to $6 billion on projects and a net clash outflow of as much as $2.5 billion.
“That’s a lot of capital up front, and then you get a payout over many years,” Chief Executive Reed Hastings said in a quote from The Times. This means that Netflix will continue to shell out the big bucks in hopes of making a profit in the future. This strategy seems doomed to fail to some experts, especially if Netflix can no longer create buzz-worthy content.
“Nobody is ever the dominant player forever,” Mike Vorhaus, president of Magid Advisors, told The Times. “I think they’re going to need some luck in not drowning in debt in the ultimate slowdown of growth.”
Netflix boasts cortically-acclaimed hits like Stranger Things, but most of the biggest shows are licensed from outside studios, including Orange Is The New Black and House of Cards, which costs money to obtain. Netflix has also cancelled many of it’s original shows in recent months, like Girlboss and The Get Down.