Currently, streaming services are popular among people, pushing aside cable as a thing of the past. Netflix is one company that changed the way people viewed movies and television shows. It has had tremendous success, but newer streaming services are constantly threatening to overthrow Netflix for good and the amount of debt the company has does not help to improve this situation.
Interesting Engineering informs that entrepreneurs Marc Randolph and Reed Hastings founded Netflix in 1997 and they turned the company from a rent-by-mail DVD service to a subscriber-based model. By 2007, online streaming was available to every Netflix customer, and in just three years, they offered this service on Xboxes, iPads, iPhones, Nintendo Wii, and other devices. Soon Netflix was available in Latin America, the Caribbean, Europe, and more locations. The company’s success was exponential, even winning 31 primetime Emmy nominations and going worldwide only nine years after streaming became available.
Netflix was one of the first streaming services to rise to the top, but now is it at risk of sinking down to the bottom? With competition like Disney+, Hulu, Amazon Prime Video, and Apple TV+ at every corner, Netflix has made it a priority to create new content to keep its customers engaged. Variety shares that this year, the streaming company is looking to spend $17.3 billion on their original shows. Compared to Disney and WarnerMedia who plan to invest $1 billion and $2 billion, respectively, Netflix is overspending to stay relevant. As claimed by Collider, Netflix is already looking at $14.6 billion long-term debt and “owes around $19.1 billion to content suppliers.” Even with this astounding amount of money owed, Netflix still holds the number one spot of most viewed tv content.
After Disney announced that it would be removing its films and television shows from Netflix, many believed this would mean bankruptcy for Netflix. According to USA Today Netflix lost 5.8% of its viewers to Disney+, which consists of over one million people. On its first day alone, 10 million people subscribed to Disney+, surpassing predictions that Disney would gain 20 million in a year. Despite Netflix’s billions in debt and the amount of viewers it lost, USA Today believes the company has no reason to be worried. Cowen & Co. ‘s John Blackledge determined that Netflix has more content variety, which is what might save them in the future.
Netflix also has hundreds more content to offer its customers than Disney. As mentioned by BGR, Netflix has over 5,800 titles while Disney has under 800. Considering that Netflix has more in their library and Disney+ is a cheaper option, Netflix is not worried because people are likely to get both streaming services. Forbes states that if Netflix does not bring in more subscribers “it will not be able to meet its debt obligations and it will quickly throw the company into bankruptcy.” New movies and shows bring in more viewers so, as a Wall Street Journal article claims, decreasing spending risks losing customers instead of gaining them.
Money owed and an increasing amount of competitors does not mean the end for Netflix. With its large variety of entertainment and highly successful original content, this production company’s future is one that is uncertain. Its future success or failure is what will determine if the obstacles put in its way will be ones that keep Netflix at the top or give it a strong push to the bottom.