Netflix’s greater than 100 million subscribers could have many new unique exhibits to binge watch within the subsequent few years. The corporate has $15.7 billion (sure billion!) in obligations dedicated to streaming content material offers.
CEO Reed Hastings stated at a convention earlier this 12 months that $6 billion of that’s for this 12 months alone.
So will you need to finally pay extra to observe your favourite Netflix exhibits? Maybe. Netflix has really began to boost its month-to-month subscription charges in some markets.
It clearly must differentiate itself as different media corporations, particularly Disney, begin to take a look at Netflix as extra of a foe than pal. Which means Netflix will probably spend much more cash on content material to switch a few of the exhibits it’ll in the future lose.
Simply final week, Disney (DIS) introduced plans to start its own streaming service in 2019. The Home of Mouse will finally transfer many Disney motion pictures and TV exhibits from Netflix to that new, yet-to-be-named streaming enterprise.
However though Disney owns the Star Wars galaxy, Netflix is the streaming media empire that’s hanging again. Netflix (NFLX, Tech30) shortly countered with a transfer that would probably damage Disney’s ABC community.
Netflix has signed Shonda Rhimes, the author/creator liable for mega hits “Gray’s Anatomy,” “Scandal” and ” Get Away with Homicide, to a multi-year deal.
Phrases of the Rhimes deal weren’t disclosed. However it’s affordable to surprise if Netflix might have to spice up its month-to-month subscription fee to assist pay for this and different new packages.
In its most up-to-date quarterly earnings submitting with the Securities and Change Fee, Netflix stated that “we anticipate that infrequently the costs of our membership plans in every nation might change.”
Within the U.S., the corporate at the moment has three tiers of pricing. A primary streaming plan prices $7.99 monthly, an ordinary streaming plan is $9.99 and a premium plan is $11.99.
So one other value hike within the U.S. appears unlikely anytime quickly — regardless of how a lot Netflix is spending on “Shondaland” exhibits, a brand new Western from the Coen Brothers and different unique packages.
Netflix did enhance costs in Australia earlier this summer time and simply raised costs in Canada final week as nicely.
On the one hand, the corporate might not want to boost costs an excessive amount of if it retains including subscribers and racking up extra income and income. Netflix is predicted to report a greater than 25% enhance in gross sales for 2017 and that earnings will double.
Netflix shares are nonetheless up about 40% this 12 months. The corporate’s market worth is almost $75 billion, making it value greater than conventional media corporations Fox (FOXA), CBS (CBS) and Viacom (VIAB) and solely barely lower than CNNMoney proprietor Time Warner (TWX).
Nevertheless, shares of Netflix have taken a little bit of successful prior to now week since Disney introduced its personal streaming plans. Take into account that Netflix should proceed to spend so much of its personal cash if it intends so as to add extra A-list expertise for unique packages.
Although Netflix’s money ranges are up prior to now few months, additionally it is piling on extra debt. The corporate completed the second quarter with $three.four billion in long-term debt, up from $2.9 billion on the finish of December.
John Janedis, an analyst with Jefferies, stated in a report that Netflix is “aggressively shifting to owned unique content material” and added that the corporate’s latest deal to purchase comedian e book writer Millarworld “additional exemplifies the significance of owned IP.”
Translation: Netflix might want to maintain elevating money if it needs to nonetheless have hits as soon as exhibits like “Orange is the New Black” and “Home of Playing cards” lastly finish their runs.
CNNMoney (New York) First printed August 14, 2017: 2:34 PM ET