Amid the imminent streaming wars between familiar and new faces, Netflix is preparing to raise two million dollars in debt to finance more production, acquisitions, and capital expenditure through its service. The streaming conglomerate has already accumulated over 12 million dollars in debt, but views this financial decision as a valid approach in staying ahead of the competition.
Upcoming services such as Disney +, HBO Max, and Apple TV+ are each heavily marketing their original content to attract subscribers. Netflix hasn’t seen a significant subscriber drop over the years, but the push to make an investment in future original content is necessary in order to maintain a level of interest amongst its subscriber base. As Disney+ and Apple TV+ are drawing projected consumers based on its proposed content slate, both also hold an advantage over Netflix with its low starting price point.
Netflix won’t consider dropping its monthly rate, but the need to produce more original content and acquire more enticing IP’s is crucial in order to grow in the future and retain users. As a result, Netflix has confirmed that it will be spending $15 billion dollars on content in 2019, its largest annual budget to date.
Netflix CFO Spencer Neumann has stated that the company views its current negative free cash flow as an “investment in future content to be delivered on our service.” The world of streaming is only going to grow, and at this point, so does Netflix. Losing content such as Friends, The Office, and Parks and Rec leave a gapping hole for comfort television. The company has recently acquired the sitcom classic Seinfeld, but that may not fill the void for much of its young audiences. Continuing to make mega-deals such as Seinfeld will continue to keep Netflix afloat and progressively relevant. The 12 million dollar raise in the case makes sense, Netflix is in trouble and viewers want more. And the leading company in SVOD is willing to make the financial expenditures to stay ahead.