Forbes has an article today which is bad doomsday stuff about Netflix's future but they raise one interesting aspect which is that Netflix is currently nearly $11bn in debt and that is rising by around 59% per year.
Netflix's chief advantage currently isn't its content, it's its distribution model. The way modern conglomerate business works means that simply losing Warner Bros and Disney content will cause massive damage to Netflix and the company simply cannot compete on a content level no matter how much debt it ploughs into the problem. With rival services coming in at half the price as well it means that just 4-5 years of disruption to Netflix's performance could cause catastrophic damage to the company as it cannot afford to keep accruing debt the way it has been yet any hit on new subscriptions will cause large holes in its earnings and share value. Meanwhile that debt will need to be paid and Netflix may find itself outmarketed very quickly.
Netflix's chief advantage currently isn't its content, it's its distribution model. The way modern conglomerate business works means that simply losing Warner Bros and Disney content will cause massive damage to Netflix and the company simply cannot compete on a content level no matter how much debt it ploughs into the problem. With rival services coming in at half the price as well it means that just 4-5 years of disruption to Netflix's performance could cause catastrophic damage to the company as it cannot afford to keep accruing debt the way it has been yet any hit on new subscriptions will cause large holes in its earnings and share value. Meanwhile that debt will need to be paid and Netflix may find itself outmarketed very quickly.
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