Netflix is concentrating on creating more original content, and they have reportedly raised nearly $1.6 billion in debt financing to buy or create any show it desires. Executives from Netflix stated the money can also be utilized for other strategic transactions, which includes acquisitions.
The world’s leading streaming service is facing fierce competition from Hulu, CBS, Disney, and other online streaming sites. In an effort to combat these companies, Netflix plans to release 80 films in 2018, which is a 60% increase from what they’ve produced in 2017 to date.
Raising money for programming has recently become a common trend for Netflix, as they announced an $800 million debt offering in 2016, and a $1.1 billion raise only 6 months later. Netflix is expected to take a loss in upcoming years due to massive fundraising rounds, but they are confident this investment will pay off in the future when they create more original hits like “Stranger Things” and “House of Cards”.
According to the company’s official announcement, Netflix “intends to use the net proceeds from this offering for general corporate purposes, which may include content acquisitions, production and development, capital expenditures, investments, working capital and potential acquisitions and strategic transactions.”
According to Deadline, Netflix executives plan to spend between $7 billion and $8 billion next year on film and TV titles to create more popular content. Essentially, the company is taking the “spend money to make money” approach because they understand that they must put in more money in order to get a greater return later on. Hulu is currently teaming up with Spotify to create a dual subscription offer for only $5 for college students, and reports show the two companies have benefited from the mutualistic relationship. Netflix has also increased their subscription prices to up the quality and quantity of upcoming shows and movies.
Netflix has dominated the online streaming industry in the past few years, so the current investment will only leave subscribers wondering what other exciting content they’ll release in the years to come.