Netflix is betting big on the fact that originals are the future of its platform.
The popular streaming service is already $2.37 billion in debt, but now, the company has announced plans to raise another $800 million via a new debt offering in order to fund and create additional original content. In total, Netflix says that it will be $3 billion in debt once this plan has come to fruition, though the service also emphasizes that its predicted rapid subscriber growth will make up for this loss.
In the past Netflix CEO Ted Sarandos has said that his company plans to spend $6 billion on creating original series and films, with a small portion of that money also being used for acquiring content and signing exclusive deals. Sarandos says that he wants Netflix’s catalog to consist of approximately 50 percent original content — a fact he’s mentioned in the past — and a significant move for the company, but one that makes more sense now given its still somewhat recent global roll out.
With the international movie and television licensing system still operating as it always has, content is licensed by region, with production companies selling off rights on an individual basis in various countries. Netflix’s originals, however, aren’t restricted by this archaic system and can be released across the the 130 platforms the streaming service is available in.
This negates the issue of some regions having content that others do not, as well as gives subscribers less reasons to region-switch via proxy services, a process that is significantly more difficult than it once was thanks to Netflix’s new blocking efforts.
Sarandos also says that it’s Netflix’s subscriber growth and not ratings that drives his company’s business. He believes that having more original and exclusive content is key to Netflix’s future, though according to the service’s most recent quarterly earnings report, the platform is growing slower than it once was.