According to the L.A. Times global streaming company Netflix have been on a bigger binge than its customers, racking up debts and obligations of $20.54bn. It’s suggested these liabilities have been born out of their push for producing original content such as award-winning Stranger Things.
The same article reports Netflix has more than doubled its spending this financial year and is set to spend over $6bn on it’s in-house produced content.
Netflix have acted quickly to quash these rumours and to reassure subscribers and investors. A Netflix spokesperson told Digital Spy, “The L.A. Times story inaccurately calculates our debt, counting our streaming obligations (i.e. our content contracts with studios) of $15.7bn as debt, which it isn’t. The correct number: we have total gross debt of $4.8bn vs. our equity market value of about $75bn. They have since corrected the story.”
The L.A. Times article factored in $15.7bn of streaming obligations which count as future content expenses opposed to current debts. Netflix have stressed these sort of liabilities are not unique to the streaming service with Disney owned ESPN liable for $49bn of sports content alone, but were not being marked out as being in debt for that figure.
This controversy comes just several weeks after it was announced Netflix had surpassed expectations and grown their subcriber number to 104m globally, which was pinpointed to be down to the aforementioned home-grown content.
To continue growing Netflix hope to continue to pump money into their self-produced content and less to external studios. This is a risky tactic as for every ‘Stranger Things’ there are a dozen ‘Sense 8”s and ‘The Get Down”s.
Netflix is $20 billion in debt. That's what happens when you keep producing new Adam Sandler movies.
— Denizcan Targaryen (@MrFilmkritik) July 31, 2017
Netflix $20 billion in debt and I’m still gon make a new acc each month for a free trial
— Coon God Mar 🤴🏾 (@YallSomeCoons) July 31, 2017
— Los Angeles Times (@latimes) July 31, 2017
Netflix helped convince the majority of people that physical media was dead just in time to announce that they're $20 billion in debt.
— Minovsky (@MinovskyArticle) July 31, 2017