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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.
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(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.