Subscribe To Netflix Is Borrowing More Money Than Ever To Cover Its Original Programming Updates
It's been a good year for Netflix. The company exceeded expectations in subscriber growth in their most recent earnings report, and despite a pricing increase and Disney's announcement that it's pulling a bulk of its titles from the service at the year's end, things are still looking good. So good, in fact, that the company is increasing its debt-owed by borrowing around $1.6 billion to cover next year's original programming, which is the biggest one-time funding that Netflix has secured yet.
According to Techcrunch, the money is to go towards general content purposes such as picking up shows, producing and developing new content, along with some other investments and similar things of that nature. In total, Netflix has said it intends to spend somewhere between $7 billion and $8 billion in 2018, which is up from last year's $6 billion. While Netflix was somewhat vague in its specific reasoning for the $1.6 billion debt, it seems apparent that its goal is to pour more money into original content and continue betting on its subscriber numbers growing throughout next year.
As for what that means exactly for the American consumer is up in the air. Currently, most of Netflix's new subscribers are coming from places outside of the United States, so it's likely that the company will be investing more money into creating original content for foreign audiences. In an ideal scenario, these shows could also perform well with Americans and other Netflix-heavy countries, and everyone wins. With Netflix already featuring shows like the Italian drama series Suburra on their American YouTube channel, it's a strategy they're already implementing in ways and hoping it yields results.
While Netflix is borrowing more than they've ever previously borrowed, this is becoming a trend for them. It's hilarious to think that two years ago we reported how crazy it was the company was spending a billion dollars on content, and now, $20 billion in debt later, it's spending over 7 times that amount. This is the sixth time since 2013 the company has sold off its "senior notes" to be paid back years in the future, and while the company is piling up the debt, it has seen a lot of financial growth over the years that that would indicate this debt-filled strategy is paying off.
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Let's hope so anyway because there are a ton of shows they have like Stranger Things that many would rather not live without! Speaking of which, be sure to check out our latest episode of The Cord Cutter Podcast where we discuss all things related to streaming as well as Season 2 of Stranger Things. For some non-podcast related resources for streaming that are just as helpful we also have a Netflix guide that has all the latest and greatest premieres. There's also our fall premiere guide which has everything worth checking out over the next couple months, so be sure to bookmark that.