Not really. What I’m saying about Netflix is they’re spending their money irresponsibly. It reminds me of the dotcom bust. They’re paying executives and talent 2-3x the going rate to lure them away from other studios, and upsetting the Apple cart for everyone, forcing the other studios to up their costs in the process.
Except they're not. If people want something and their data shows people want it, they'll pay for it. You have to understand that if you want to succeed, you need to pay for the talent. It's why Apple has been upping their AI salaries which were lower than the standard in SV for years. They want to improve Siri, they have to spend money. Siri may take another 8 years to become level with today's Alexa, Cortana or Google's AI. And according to a user-submit site such as Glassdoor, their pay rates are slightly above other major SV companies, but those companies don't focus exclusively on streaming.
And in the end, it's far cheaper to borrow and repay money than spend your money outright. It's cheaper for Netflix to borrow $5B in a 3-year span at a fixed rate with no interest and required to pay it back within 8 years with a 2 year grace period and quarterly lump sums atop monthly payments than it is to burn through their reserves and pay for it outright.
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The difference is, Netflix is about to be left with only their original content library and new programming. Their DVD business is dwindling, which until recently was responsible for a substantial portion of their profits — more than their subscriber base.
These are contradictory claims. How is it both a substantial amount and dwindling? According to the following article, they have just over 3M subscribers, and their net amounts to less than $40M a month. In 2017, all of Netflix had a net of $558M. In 2018, they surpassed this with a net income of over $1.2B.
https://www.cnbc.com/2018/05/20/netflixs-dvd-business-still-has-more-than-3-million-subscribers.html
Netflix has over 140M subscribers. Disney estimates to have just over a third of that amount by 2025. Hulu has offered subscriptions for a decade now. They crossed over the 25M subscribe point back in December.
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The Netflix model of grossly overpaying talent also assumes that the talent will continue to crank out hit shows, based on the hits that landed them the massive payday in the first place. That’s a massive overestimation. And it’s more of the same thinking that has them overpaying for everything because the have billions on loan. Netflix is basically throwing everything at the wall, in a strategy that almost assures something will stick. If enough things don’t stick, or their massively overpaid talent don’t deliver a string of hit shows, veteran producers like Disney and ATT will almost certainly be the preferred choice for many of the Netflix subscribers who must chose which services to subscribe to, if only for the added value of extensive back catalogue.
This is the same with any tech company that relies on data to make decisions. Google has thrown hundreds of products at the wall and not much has stuck. Apple has done the same. Amazon has done the same. Here's a Google products graveyard.
https://gcemetery.co/
Though you keep stating "grossly overpaid talent" and aren't offering any examples. Do you mean engineers, network administrators, accountants, what exactly? And can you link to examples and specific or similar companies and the pay rates for those positions?
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Netflix is in a far more precarious position than Disney, ATT, or Comcast, or even Amazon. Disney will be managing a huge debt load for many years, but they also have substantial assets to help them recoup, and are well diversified such that their entire business won’t hinge on a streaming service. Netflix is virtually the opposite situation.
As of September 2018, the company was carrying $12B in debt. ATT is in over $160B in debt. Prior to the Fox assets purchase, Disney had a total debt of around $21B. By spending money on Fox assets, they acquired those via debt and also took on debt that portion of Fox had. Disney spent roughly $72B for Fox's assets and also took an extra $14B in debt Fox had as part of the deal. Disney spent over $85B for the deal. Disney expects to operate their streaming service at a loss of $4.5-6B a year. This is on top of $2B for new content plus a side amount of nearly $600M in cash reserves just to compete with Netflix. Apple themselves have over $120B in debt.
As you said yourself, carrying debt isn't a bad thing. Especially when your stream competitors have 10x a much as you do. The Disney service won't have any R rated material. It's a completely family friendly service. This isn't optimal when you're trying to compete. I can't speak for other adults, but if I'm paying for a streaming service, which I do, I want to be able to watch movies with guns, cursing, explosions and maybe the occasional risque scene.