– by David Kozlowski

How much money is it going to take to win the streaming wars? According to a recent article by the LA Times, Netflix has already incurred over $20 billion (with a “B”) in long-term debt — a figure greater than the national debt of most countries (though to be fair, over $15 billion of that is money owed to studio due to content contracts, which is actually tracked separately. Netflix themselves pegs their debt as $4.8 billion). And yet, Netflix has used this financing to generate some pretty extraordinary results:

“104 million subscribers worldwide, up 25% from last year and almost quadruple from five years ago. Its series and movies account for more than a third of all prime-time download Internet traffic in North America. Its more than 50 original shows garnered 91 Emmy Award nominations this year, second only to premium cable service HBO.”

My parents used to warn us kids, “Money don’t grow on trees…” (A sentiment typically expressed after we broke something valuable.) Netflix just laughs and laughs at such quaint adages — they simply went out invented a new kind of tree!

Related – Netflix Expects To Release A Whopping 80 Original Films Next Year

Apparently, Netflix feels this meager indebtedness isn’t sufficient for their global domination needs. Variety reports that Netflix has piled on another $1.6 billion to procure more original content in 2018! As we previously reported, Netflix is pushing for 80 new original films alone next year (in addition to all of these original series), which is a substantial step up from the 50 we are getting this year.

As one might imagine, the interest for all this debt is exceptional — over $163 million for just the first nine months of 2017. Fun with numbers! However, for all of Netflix’s gains in subscribers and content, the service still runs deeply in the red (and will for the foreseeable future). So while this year, their cost of original content is around $6 billion, next year’s will run closer to $8 billion, which isn’t unsubstantial.

Five years from now it should be fascinating to study how much all of these streaming services — Hulu, Netflix, Amazon, CBS All-Access, and Disney — have spent to win this content war (and learn who does and doesn’t survive too).

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SOURCE: Variety , LA Times

  • Moby85

    This is a concern for me. With Netflix recently upping Canadian subscriber fees, yet again, I am getting close to the point where the service almost isn’t worth it for me. I don’t watch a ton of the originals, just “Love”, “Stranger Things” and “NARCOS”. Someone has to pay these debts – and make no mistake it’s the users. Netflix is playing with fire marketing-wise.

    • I hear you. Even after cutting the cord, I’m still paying $100 monthly for Internet, another $35 for YouTube TV, and $10 for Netflix (let’s not even discuss what I’m paying for my SmartPhone each month). There’s no room in my budget for anything else, so Netflix had better increase the film and series offerings or I’ll bail and treat them like HBO Go, which I buy for one month each year in order to binge.

  • Victor Roa

    There is an upside to this. Last night twitter was all “Look at how bad the buffering is on #CBSAllAccess” and “Wait, I’m still paying for ads?” and then a series of images showing how bad the streaming quality is. Netflix is becoming the standard the audience is crying for, especially with the compression quality and networking capability and we still live in an era where Cable Boxes are not up to par with an XBox 360. https://uploads.disquscdn.com/images/0e322a70d4d4aca5cdc16191be0c08c0ceb2bce21857ad92f028d077db89e8b6.jpg
    Amazon still feels like a scam through poor UI design to trick stressed out parents to mistakenly pay for the wrong thing while their kids yell at the shows they want to watch. Plus their compression on Pixar films compared to 10 year old DVDs looks like poop from the butt.

    • I cut the cord and watch TV via YouTube TV, which is excellent (its major problem is lack of channels). I tried Hulu Live TV and had the same buffering issues that you described with CBS All-Access — unacceptable!

David Kozlowski is a writer, podcaster, and visual artist. A U.S. Army veteran, David worked 20 years in the videogame industry and is a graduate of Arizona State University's Film and Media Studies.