from the and-I-thought-a-night-out-at-the-movies-was-expensive dept.
Netflix burns cash at a record pace, but investors love it
In its third quarter earnings statement on Tuesday, the company reported negative free cash flow of $859 million, the biggest figure in its history. Netflix continues to increase spending on original content as it seeks to compete with other players like Hulu, HBO and planned streaming services like Disney's, scheduled for next year. Netflix will reportedly spend at least $8 billion on content in 2018.
It would be a shame if someone were to pirate or illicitly stream that content.
Netflix has criticized the EU's local content quotas:
Netflix used its third quarter earnings report to criticize the European Union over a new content quota for streaming services. The EU, writes Netflix CEO Reed Hastings in the report, is "currently rewriting its audio visual rules" that will demand streaming services like Netflix "devote a minimum of 30 percent of their catalog to European works." Netflix's report acknowledged that catering to a specific audience encouraged more regional original programming for international audiences, but suggested that enforcing quotas on a streaming service could have unwanted negative effects.
Netflix is already set to spend $1 billion on European content this year.
Also at MarketWatch.
Related: Netflix to Raise Another $1.6bn to Finance New Films and Shows
Netflix Beats Wall Street Expectations on Subscriber Growth, Reaches $100 Billion Market Cap
Netflix Won't be Going to Cannes After All
Netflix Shares Plunge as Subscriber Growth Rate Stalls
Netflix Will Now Interrupt Series Binges With Video Ads for its Other Series
Local Product Quotas for Netflix, Amazon to Become Law, EU Official Says
Animated "Diablo" Series Reportedly Coming to Netflix
Netflix Buys ABQ Studios in Albuquerque, New Mexico
Related Stories
The video streaming service plans to spend up to $8bn on content next year to compete with fast-growing rivals.
Netflix will issue bonds to investors, although the interest rate it will pay has yet to be decided, the company said in a statement.
Netflix plans to release 80 films next year, but some analysts are wary about its cash burn and debt interest costs.
The company's latest debt fundraising is its largest so far, and the fourth time in three years it has raised more than $1bn by issuing bonds.
Earlier this month, Netflix said it would raise prices in countries including the UK and US for the first time in two years.
Has Netflix added enough original material to make up for the licensed content they've dropped and the price increase they mean to enact?
Netflix has continued to add millions of new subscribers, even after it raised prices:
Netflix Inc snagged 2 million more subscribers than Wall Street expected in the final three months of 2017, tripling profits at the online video service that is burning money on new programming to dominate internet television around the world.
The results drove Netflix to a market capitalization of more than $100 billion for the first time. Shares jumped 9 percent to over $248 in after-hours trading on Monday after rallying throughout the month and rising 53 percent last year.
The company has signed up more than half of all U.S. broadband households and is building its customer base in 190 countries by spending billions on programming.
Netflix picked up 6.36 million subscribers in international markets from October through December, when it released new seasons of critically acclaimed shows "Stranger Things" and "The Crown" as well as Will Smith action movie "Bright." That topped Wall Street expectations of 5.1 million, according to FactSet.
Along with 1.98 million customer additions in the United States, the company ended the year with 117.58 million streaming subscribers around the globe, despite a price hike in October.
From a Bloomberg op-ed: "The rapid pace of subscriber additions is impressive, but so is the amount of cash going up in flames."
Also at USA Today and The Street.
Previously: Netflix Has More Subscribers Than Major Cable Providers in the U.S.
Disney to Break Away From Netflix With its Own Streaming Service
Netflix Adds 5 Million Subscribers, Doubles Profit
Submitted via IRC for SoyCow9228
After a rule change disqualifying its films from competition, it won't screen anything.
Netflix won't be screening anything at Cannes this year, either in or out of competition. Despite debuting two titles last year, the first streaming provider to do so at the prestigious film festival, the backlash has been significant. The new rule banning any movie from competition that didn't have a theatrical run was a clear message: Streaming content creators weren't welcome.
"We want our films to be on fair ground with every other filmmaker," Netflix's chief content officer Ted Sarandos told Variety. "There's a risk in us going in this way and having our films and filmmakers treated disrespectfully at the festival. They've set the tone. I don't think it would be good for us to be there."
Source: https://www.engadget.com/2018/04/11/netflix-will-not-go-to-cannes-after-all/
Netflix shares plunged by more than 14% in after-hours trade on Monday, after the firm reported disappointing subscriber growth.
Netflix said it added 5.2 million subscribers in the three months to the end of June, the same number it did during the period last year.
The streaming service had forecast growth of 6.2 million.
The decline in share price follows a successful run for the stock, which had roughly doubled so far this year.
Is the number of Netflix subscribers reaching a plateau based on its current library of titles, or are competitors eating into its growth?
Submitted via IRC for Fnord666
The news emerged via user reports, particularly on the primary Netflix Reddit community, in which users claimed that ads for entirely different series would play between episodes of a given show's binging. One initial claim said that "unskippable" ads for the AMC series Better Call Saul appeared between episodes of Rick & Morty and that this ad appeared while using Netflix's smart TV app on an LG set in the UK. Replies to that thread included an allegation that a video ad for I Am A Killer (a Netflix-produced true-crime series) appeared between episodes of the animated comedy Bob's Burgers.
An American Netflix user offered more details for exactly how the ads appear:
After the episode ended, I got a screen saying "More Shameless up next... " then the title card slid off screen, and it continued with, "but first check out Insatiable" [a Netflix-exclusive series] and started playing the trailer.
In a statement given to Ars Technica, Netflix described the change as follows: "We are testing whether surfacing recommendations between episodes helps members discover stories they will enjoy faster." The reasoning, Netflix's statement says, comes from its last controversial decision: to add auto-playing videos, complete with unmuteable audio, while browsing through Netflix content.
Netflix offered a major rebuttal to at least one Reddit claim, pointing out that the ads for Netflix content are entirely skippable.
From Variety:
Quotas obligating Netflix, Amazon and other streaming services operating in the European Union to dedicate at least 30% of their on-demand catalogs to local content are set to become enshrined in law soon.
Roberto Viola, head of the European Commission department that regulates communications networks, content and technology, said the new rules, which will also demand visibility and prominence of European product on streamers, are on track to be approved in December.
"We just need the final vote, but it's a mere formality," he told Variety at the Venice Film Festival.
Netflix, Amazon and other streamers will be required to fund TV series and films produced in Europe by commissioning content, acquiring it or paying into national film funds through a small surcharge added to their subscription fee, something which is already happening in Germany. Netflix tried unsuccessfully to fight the German surcharge in court.
Submitted via IRC for TheMightyBuzzard
It looks like Netflix could be adding an animated "Diablo" series to its original programming lineup.
Boom! Studios founder Andrew "Andy" Cosby tweeted on Wednesday that he's in "final talks" to write and show-run the upcoming series from Activision and Netflix. "It's very exciting and I hope to the High Heavens it all works out," he said.
[...] There's no information currently on what the "Diablo" series might entail, but Cosby will be bringing his pedigree as the writer behind the new "Hellboy" film reboot to the project, which should make for the kind of gory and violent expectations fans have for any series that could be based on the "Diablo" series.
My inner geek and child both say "yay!" but my inner cynic says "oh no...".
Source: https://variety.com/2018/gaming/news/animated-diablo-series-netflix-1202952386/
Netflix buys up New Mexico studio facility for massive new production hub
When Netflix moved into its new Los Angeles headquarters last year, the company made sure it had several sound stages at the ready for any production needs. Now the streaming service is taking things a step further, acquiring ABQ Studios in Albuquerque, New Mexico, as part of a plan to bring as much as $1 billion in production to the state over the next 10 years.
Los Angeles is often thought of as a center for film and television production, but studios and production companies have been regularly traveling to other locations to shoot for years. States like New Mexico (Breaking Bad, Netflix's Godless) and Georgia (The Walking Dead, Avengers: Infinity War) can provide a more attractive environment because they're not only less crowded than Los Angeles, but the states themselves also offer tax breaks and financial incentives that actually make it more cost-effective to shoot there. ABQ Studios, which boasts nine stages offering over 170,000 square feet, has been the site of numerous high-profile movies and shows, including Logan, Preacher, Better Call Saul, and the original The Avengers.
Perfect for dry, desolate content.
(Score: 2) by jmorris on Thursday October 18 2018, @06:07AM (7 children)
Seems some companies can lose unlimited quantities of money and be continually replenished by the capital markets. Almost like the powers that be have picked a winner they know they can control and will ensure it defeats all opponents by simply spending them into bankruptcy. But that would be a crazy conspiracy theory, right? Netflix is just like Amazon in this respect, the more losses reported the higher the stock soars on the news.
Not quite the same is Youtube, a business model that almost seems designed to never turn a profit, which prevents anyone from ever really trying to compete since they know Google is looking for places to stuff their obscene profits from advertising based on mining everyone's data.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @09:48AM
No, it's central planning. In a free market, the EU wouldn't have to legislate regional programming into existence. There's no conspiracy, just follow the money and see who is buying the market and providing the financial backstop.
The usual statist clowns can chime in and tell me this never happened [independent.co.uk] and isn't happening. [variety.com]
(Score: 1, Interesting) by Anonymous Coward on Thursday October 18 2018, @10:46AM (2 children)
Except, Netflix had $9 billion in revenue in 2016, $12 billion in revenue in 2017, and in first 9 months already has $12 billion in revenue. Their net income (after expenses) was less than $200 MILLION in 20016, $560 MILLION in 2017 and already more than $1000 MILLION in first 9 months.
They haven't issues stock in years. They have issued about $5 billion in debt in last 2.5 years. And their cashburn is adding to their library for streaming, that is growing steadily in revenue. So far, they've generated more than $2.8 billion in *profits* in their operations. Basically, if the company is liquidated at current valuations, they are worth about $5 billion for shareholders, or about $12/share. So yes, maybe their $360 price is a little high (30x value), but hey, optimism?
But I wouldn't call netflix a "mandate of heaven" company. They are not Uber ;)
(Score: 1, Informative) by Anonymous Coward on Thursday October 18 2018, @01:49PM
From the Q3 financial statement cashflow tab it shows they spent 1,704,169 more than they made (1,077,308) so far in 2018.
https://ir.netflix.com/ir-overview/profile/default.aspx [netflix.com]
(Score: 2) by jmorris on Thursday October 18 2018, @11:09PM
Well lets compare. Valuations have fluctuated and right now they aren't worth quite as much as Disney. Disney's market cap is 172B vs 151B for Netflix. Disney owns ABC, ESPN, Pixar, Marvel, Star Wars and releases major motion pictures under the Disney and several other labels, their back catalog is not big, it can only be described as yuge. Disney is soon rolling out a streaming service to directly compete with Netflix. Meanwhile Netflix has a few made for TV productions in the vault and some contracts to stream other people's stuff that is likely to increase in cost or simply be yanked entirely. See the problem with trying to find a rational explanation for their extreme valuation?
(Score: 2) by takyon on Thursday October 18 2018, @11:31AM (1 child)
YouTube is said to be profitable, although it wasn't for a very long time. Correct me if I'm wrong, but they weren't running ads at all for a long time. That is obviously no longer the case, although they have yet to restrict adblock users for some strange reason.
Google parent Alphabet rakes in profit, and YouTube is one of its rising stars [latimes.com]
They did have a major existential crisis in the form of the "Adpocalypse" but they have been laser focused on addressing that, to the detriment of content creators.
About the Netflix spending, given the intense competition that Netflix faces now and what is looming around the corner, I think they need to spend a lot of money to survive. Although there are plenty of old films and TV shows on their catalog, their content-owning competitors, particularly Disney and other Hulu participants, can and do pull stuff out. So they've had to respond by making tons of original content. Edgier award-winning shows, the kind of stuff you might put on as background noise (like cooking shows), kid's programming, it's all being made by Netflix.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 4, Interesting) by bob_super on Thursday October 18 2018, @05:23PM
> given the intense competition that Netflix faces now and what is looming around the corner, I think they need to spend a lot of money to survive.
Won't change the end result. They are facing competitors who are now allowed to block them from reaching their customers. The Big ISPs, having achieved the repeal of Net Neutrality, will ransom Netflix until they have to raise their prices higher than Cable TV and/or the ISP's own offerings, while depriving them of the attractive content they control.
They'll eventually buy the US infrastructure at a nice discount, and Netflix might keep existing in NN countries.
(Score: 2) by Dr Spin on Thursday October 18 2018, @01:24PM
a business model that almost seems designed to never turn a profit, which prevents any need to pay tax.
FTFY
Warning: Opening your mouth may invalidate your brain!
(Score: 1, Funny) by Anonymous Coward on Thursday October 18 2018, @08:16AM (4 children)
Wake me up when geoblocking dies, k?
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @09:53AM
Goebbels > Geoblocking
The Netflix Original Series. Coming Soon.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @12:19PM (1 child)
VPNs of various kinds work. No extra cost here because of the local pollies who really want to know which porn sites people visit except them of course.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @09:09PM
Netflix tries to block clients over VPN, though.
(Score: 2) by Freeman on Thursday October 18 2018, @04:15PM
That's not necessarily up to Netflix, but the studios who own the content they are licensing. Not that I know what Netflix's position is/would be, if they had the choice. So long as they're afraid of "pirating," there will be geoblocking. Also, certain things are legal in some countries and not others.
Joshua 1:9 "Be strong and of a good courage; be not afraid, neither be thou dismayed: for the Lord thy God is with thee"
(Score: 2) by bradley13 on Thursday October 18 2018, @11:10AM (3 children)
On the one hand, there's no particular reason for some random streaming service to host local content in all the places where it can be called up. In the end, with proxies and VPNs, this requirement is basically unenforceable.
On the other hand, if they want to do business in a local market, that market does have the right to regulate their business. If they don't like it, they don't have to be present in that market.
On the gripping hand. it's just astounding how businesses like this can burn through money. Anyhow, how is Netflix not turning a profit by now? This kind of business model: "let's make a thumping loss, until we win" is bizarre...
Everyone is somebody else's weirdo.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @11:15AM (1 child)
They are making a profit. $1B in first 9 months this year. $500m last year.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @01:45PM
Does this number matter? Don't people look at the free cash flow because netflix has a crapload of expenses they are pushing into the future?
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @11:17AM
And on the hind leg... they're keeping that one free of any bear trap the Hollywood trash may keep open for them.
(Score: 2) by Leebert on Thursday October 18 2018, @01:09PM (5 children)
They've been saving money by making their DVD-by-mail service shittier by the day.
(Score: 2) by takyon on Thursday October 18 2018, @01:28PM (4 children)
I didn't know they still had one.
https://en.wikipedia.org/wiki/Netflix#Qwikster [wikipedia.org]
It says they are keeping it around until at least 2022.
[SIG] 10/28/2017: Soylent Upgrade v14 [soylentnews.org]
(Score: 3, Insightful) by Leebert on Thursday October 18 2018, @02:01PM (3 children)
Streaming services can't even come close to the DVD-by-mail service for selection.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @05:33PM (2 children)
Well, it CAN, but it wont.
They could stream everything on the face of the earth if they wanted to pay for the storage and licensing costs.
(Score: 2) by hendrikboom on Thursday October 18 2018, @09:39PM (1 child)
Except it Europe doesn't have enough movies, they'll have to restrict nonEuropean movies in order for Europe to get its 30% local content.
(Score: 0) by Anonymous Coward on Saturday October 20 2018, @12:48PM
This was the conspiracy theory touted locally about why Australians are blocked from seeing too much American content. Must keep those local programming ratios up! Oh, there simply isn't enough local content, cull the overseas crap!
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @01:38PM
FYI: This stock has gone from 334 to 405 to 360 since October 16.
(Score: 0) by Anonymous Coward on Thursday October 18 2018, @05:17PM (1 child)
"It would be a shame if someone were to pirate or illicitly stream that content."
No, it wouldn't.
(Score: 2) by bzipitidoo on Thursday October 18 2018, @09:40PM
Quite. Netflix may be helping the world slide towards a subscription based business model, maybe with more success than 1980s cable TV.
Netflix is cable TV without the expense of maintaining a physical network. Cable TV companies meanwhile have morphed into ISPs with the content delivery relegated to a side business. Are they still stuck on the the idea of channels, or have they finally moved to on-demand viewing?
But piracy is still best.