Netflix is Bleeding Money With Debts of More Than $25 Billion
DESPITE boasting 100 global subscribers and a stack of award-winning series, Netflix is in big trouble.
The streaming giant is haemorrhaging money at an alarming rate, according to fresh reports about its business strategy, with debts totalling a staggering US$20 billion.
Its pursuit of more and more paying customers, coupled with spending a small fortune annually on producing new content, is adding up.
How did one of the most talked-about tech company’s prospects get so grim so quickly?
The LA Times reports today that Netflix has almost doubled its spending this year and expects to splash more than US$6 billion on its slate of programming in 2017.
So far, most of its investors aren’t showing too much concern given the company’s share value is up 50 per cent on last year.
“They are betting that debt financing in the near term will create growth and yield big results down the road on the theory that you have to spend money to make money,” the article reported.
However a growing pool of analysts are concerned the Netflix bubble is at risk of bursting.
With 104 million subscribers worldwide, experts fear growth could stagnate sooner rather than later.
Even Netflix itself isn’t expecting to turn a profit for a while yet, recently admitting that it expects “to be free-cash-flow negative for many years”.
Famous for its original content, the streaming service has also suffered a number of unexpected duds in recent times.
Expensive shows that failed to hit the mark with viewers and critics are starting to pile up, with Girlboss and The Get Down among the list of axed projects.
Its latest costly endeavour, the star-studded comedy Friends From College, has been panned.
And even those that have been well-received have struggled to make back the money required to fund them.
Read more: http://www.news.com.au/technology/online/streaming-giant-netflix-is-bleeding-money-at-a-shocking-rate-with-debts-of-more-than-25-billion/news-story/d7001732c2c5cea197252d58ed492f25