It has been an amazing ride for streaming giant Netflix. The company started out by shipping DVDs though the mail that people would return in envelopes provided by the company. The success of that business eventually led the company to get involved with streaming all of their movies and shows. They eventually became the largest streaming company in the world. Their dominance lasted for many years. They are still in the lead now. However, the people who run Netflix know that the next year will be critical in determining the future of the company. It is because of this that Netflix announced the sale of junk bonds for the sum of $2.2 billion.
The money that Netflix made from the junk bonds sale will go directly towards funding original movies and shows. The company knows that the only way it will be able to retain a large number of customers is to create high quality original content. As you might imagine, it takes a lot of money to make the amount of original content that Netflix has become known for churning out regularly. This is why the company decided they needed another $2.2 billion. In order to get that money as soon as possible, a sale of the junk bonds was necessitated.
The streaming wars have been a big topic of conversation in the entertainment and finance industries. There is a lot of money to be made. However, Netflix might be losing quite a bit of money if Disney’s new streaming service really catches on as industry experts expect it will. The new competition provided by giant companies like Disney, Apple, HBO and Comcast will most likely put a big dent into the bottom line of Netflix. This is why they are pulling out all the stops to spend literally billions of dollars on content to attract new subscribers and keep the ones they already have.
It is unknown how long that Netflix will be able to sustain their profitability if subscribers start to cancel and sign up with their competitors. The pricing of the service will have a large say in whether or not people decide to stick around. Apple will also be a threat to Netflix once they start to use their vast financial resources to begin buying the rights to shows and movies. It is not known which projects Netflix will be funding with the $2 billion.
Dil Bole Oberoi
