Netflix original shows have captivated viewers worldwide.
According to the Los Angeles Times, more than 50 Netflix original shows have won multiple Emmy Awards and have been nominated 91 times. However, original content has partially caused Netflix to fall into $20 billion of debt.
“I was surprised because Netflix has been churning out originals left and right recently,” said Stephen Sleeper, senior composition major. “With all the movies and shows they produce with A-list actors, I would have figured they were prospering at this point.”
Despite billions of dollars of debt, Netflix hopes its new content will bring in more subscribers. According to the Los Angeles Times, the streaming service plans to spend $6 billion on original content this year alone.
“I’m concerned if they really need money, that they’ll start including advertisements in their service,” Sleeper said.
Major companies, such as Disney, are beginning to provide their own streaming services and are beginning to take their movies and shows off Netflix. In preparation for a possible drop in subscriptions, Netflix has focused on its original content.
In July, Netflix reported subscriber growth that was significantly higher than expected. Because of that popularity, investors believe money spent on content now will reveal profitable results in years to come. However, according to the LA Times, industry experts believe if Netflix does not come out with new profitable series soon enough, the company may collapse.
Netflix is spending money on infrastructure, building its service from the inside to strengthen its capabilities for the future.
Dr. Joel Bigly, assistant professor of business said he realizes that this is a strategic move for the company.
“Companies like Netflix want to propel themselves forward. Netflix is doing the right thing by keeping up with their competitors. Potentially, investors would feel optimistic that Netflix is trying to stay ahead of these other competitors by moving aggressively into emerging markets,” Bigly said.
Bigly said he understands why the company would want to spend a lot of money on infrastructure, putting itself into such debt.
“Debt relates to what investors think about the future of the company. At some point the debt becomes so large that the money used to service the debt becomes a big burden on the cash flow of the company,” Bigly said. “The market is the one that says, ‘Do it’ or ‘Don’t do it,’ so the aggressive position Netflix is taking is a good position. However, Apple and Amazon are right behind them.”
