Netflix has some epic-sized pockets despite being over $12 billion in debt. Last year alone, they added two billion dollars to their debt, which they’ve paid little of throughout recent years. The streaming service spends money faster than they make it. According to Wall Street firm BMO Capital markets, the streamer is investing $17.3 billion in content in 2020. Last year, they spent $15.3 billion.
More Money, No More Problems
The spending won’t stop there. By 2028, Netflix is expected to spend $26 billion a year on original content. According to Variety, the news comes prior to Netflix’s fourth-quarter 2019 earnings report next Tuesday. Investors will see how exactly the company is doing in light of new streaming services and their costly decisions, like spending around $200 million on The Irishman.
According to one analyst at the Wall Street firm BMO Capital, Dan Salmon, the “streaming wars” is all noise and Netflix’s stock remains hot:
We continue to believe the ‘streaming wars’ narrative is false and there will be multiple winners in global streaming.
Salmon believes Netflix, Amazon, and Disney are all stocks worth buying. BMO Capital adds Netflix had a solid final quarter, setting a record last year of 802 hours of original content. Imagine the soul and mind of somebody who watched all that content and cringe in terror. Those 802 hours were a 3% increase in content over 2018, too. Less is not more in Netflix’s eyes, which explains a lot of their mediocre movies and shows. They throw everything into the kitchen sink, but sometimes, they throw something wonderful in there.
The Disney+ Hit
Netflix isn’t immortal. They’ve seen dips in subscribers over the years, sometimes over raising their prices. Most notably, they took a real hit when Disney+ arrived on the streaming scene last year. Favoring Disney+, over a million subscribers cancelled their Netflix subscriptions. Moreover, Disney+ isn’t even a year old but already has the same amount of subscribers as Netflix. Both are estimated to have 19 million customers. Unlike Hulu, Amazon Prime, and Apple TV +, Disney + took some of the wind out from under Netflix’s wings.
The Streaming Wars
There’s more and more competition coming after Netflix’s lunch. They’ll always be the first major and probably most respected and enjoyable streamer of content, but this year, we’ll see the arrival of NBC’s Peacock and HBO Max. Surely they’re not as big of competition as Disney+, but most likely, it will lead a few eyeballs turning away from Netflix’s homepage.
New Netflix Content
Netflix has already announced the fantastic list of movies they’re making this year, including films from David Fincher, Spike Lee, and Gina Prince-Bythewood. So far, they have 21 original movies coming to their platform, not to mention independent movies they’ll acquire from festivals for large sums of money. This year, what else will they spend their not-so-precious money on? Well, most of their money is focused on original content, not buying other content.
They’ve secured huge deals with big-name showrunners, like Ryan Murphy, Shonda Rhymes, and the Game of Thrones bros, David Benioff and Dan Weiss. The GOT duo signed a multiyear film and TV deal, and we’ll see if lightning strikes twice for them. Netflix is looking more at producing Korean content, reaching a whole new audience. Netflix signed a three-year deal with South Korean media empire, CJ ENM’s Studio Dragon, to produce originals and license their titles for streaming. It’s a huge untapped market Netflix wants.
If there is a streaming war in the world, Netflix may win with all the money they’ve got. To give some perspective, Disney is only spending a billion a year in original content for Disney+, and both WarnerMedia and Comcast/NBCUniversal are equally spending $2 billion on their streaming services, HBO Max and Peacock.