Neither the balance sheet nor the income statement or cash flow statement supports your statement.
Looking at [0] it looks like it's.... manageable but you still need the money. If you're making 1.5 billion in profit and the next year you have 2 billion in debt to payoff...
[0]: https://www.fool.com/investing/2022/04/21/netflixs-mountain-...
related reading from when things felt more rosey in 2019:
[1]: https://www.ft.com/content/cf0f0bd6-4596-11e9-a965-23d669740...
You refinance...of course. Debt is always cycled like this. Yes, interest rates are higher than before but they are still incredibly low.
I understand that cash flow issues can be resolved with corporate debt, but it requires convinced counter parties and, honestly, future revenue to bargain with. “Our subscriber count isn’t really going up and we need to borrow more money consistently every year” is not the same as “we are immensely profitable” (though I don’t think it’s a doomsday scenario in itself)
How different is Netflix from paramount plus?
As OP said: the content business is not normal. You can't assume that big budgets == big success.
Make 29 original shows, feel great if one becomes mainstream popular.
This isn't insurmountable, and Netflix has shown itself to be full of innovative means of handling this reality. But while the bulk of the last 10 years was just gathering subscribers to pay for other peoples' content (remember, until recently, The Office, Friends, Star Trek, and Disney movies were ALL on Netflix), the next 10 will require them to do more in the way of finding original content that works, and acquiring things from smaller/foreign studios (a la Squid Game). They've got practice, but they've lost their money printer.
The problem is rarely does a show last more than a few seasons and that is mostly because of how contracts are written where you pay low for an unknown actors for 2/3 seasons and when those contracts are up for renewal you move on.
On network tv after 4 seasons it can be sold for syndication so many shows get cancelled. For netflix the money spent on new seasons keeps existing customers but does nothing to attract new ones. This forces netflix to create new shows that hopefully attract new subs.
It’s not as simple as throwing poop at the wall and hoping a bit of it sticks.
Maybe the lesson is that multiple blockbuster models interfere with each other when combined into one venture? It seems kind of like how you can’t make an infinite chain of hypervisors.
With games, though, one successful game or franchise rarely guarantees additional successful games or franchises. In some ways it's "catching lightning in a bottle", and very difficult to repeat, even if you have the same inputs (designers, programmers, funding).
From what I've heard, the game industry is notorious for laying a lot of the staff off after a game project before they even know if the game is successful or not. Then they might bring those people back for a sequel if they are still available when they start making it.
So on top of all the known issues, one can be let go at any time.
I think in our oncoming age of batteries that this expression could have new meaning.
A great game or movie can make a ton of money. But a great tech company can make 2-3 orders of magnitude more.
They have branded toys and merch everywhere in the universe and even had a movie.
Whether they’re making money, I have no idea, but from a naive point of view they seem to have been pretty successful.
Netflix is a publisher in this context but only sells through its own channels so is more analogous to console manufacturers in games. Their problem is basically having a low barrier for competitors to enter and they all own more compelling first-party content.
Most VC funded companies are doing more than producing content or are opening markets. Which isn’t to say the games investment hype cycle hasn’t been very silly lately but it’s more often a bet on technology and/or a potentially emerging market.
https://www.crunchbase.com/hub/video-games-companies-early-s...
Look at any movie studio, Disney, HBO, etc and you'll find this same story repeated time and time again. Every one of them grew at much slower growth rates. There was no 10x'ing of revenue in a few years (when in the billions).
Even outliers like Pixar existed for 20 years before becoming a significcant component of Disney.
Book publishing? Same deal.
No original content business has followed a VC growth trajectory like tech companies have. Not one. You might be tempted to argue Netflix has but Netflix has taken on a ton of debt and raised a ton of VC funding and used their profits to throw money at this problem with mixed results.
"Turn this handful of people into the next Niantic" is a far better bet, but it's not relevant since Niantic was already there! That's the similarity to Hollywood - "let's make a bunch of movies or a bunch of pilots and see which one is the moneymaker." But not many of the production companies behind those shows or movies have gotten 10x more profitable in the future by scaling horizontally.
I'm not sure if it's an overly cautious legal team they're dealing with or what, but someone should remind John Hanke that start ups don't break through by playing it safe. And to boot, casual players aren't the ones that dump money into games. Maybe they need to add age verification in to satisfy the lawyers before making a game that's actually fun to play, but this backing away from doing what they're in the business of doing is sad to watch and frankly pretty pathetic.
That seems obviously not right? If anything, the model in 'content' predates the technology VC business.
Content absolutely does scale with budget--you can make 10,000 films that cost $10,000 to produce but they will never match the box office of a film that you spent $100M on. This should be obvious: you can't even afford to pay an actor with $10,000.
That's not a growth rate that would attract a VC. Not a lot of new VC-founded studios, as a result. Would you count Quibi?
Netflix, HBO Max, Hulu, Amazon, cable networks, and movies are all competing for a finite set of attention, and there are more other things competing for that attention than ever before too. Netflix has aggressively expanded to compete globally in a way US cable never did, but that still has a ceiling.
If you ten-x'd the amount of 200-million-budget films made in a year you'd similarly hit a wall. At a certain point all you're doing is raising the bar necessary to attract consumer attention, vs attracting new attention and dollars.
We actually don’t know. They veil the real numbers for each movie in complicated shell and subsidiary corporations and private arrangements that can’t be audited by the public.
If you want to raise a bunch of VC money to open a movie studio because of that, good luck to you, but... doesn't seem like you'll get a lot of bites.
Where did I make a claim about the top line numbers?
> If you want to raise a bunch of VC money to open a movie studio
Wut? At this point I’m not sure you’re actually responding to my comment but cheers
The claim I made was about "their revenue" - that's the top-line number. You disputed that by saying we don't know.
Going back to 2019 (so taking COVID out of the consideration), "Dark Phoenix" tanked, cost $200 million. "Gemini Man" tanked, cost $172 million. Plenty of 30-70 million dollar movies that didn't do well.
This page list 680 movies that came out, no list of budget but only around 1/6th made 10 million and I'm sure there's a long list of the ~500 that made less than 10 million that cost more than 10 million to make.
I kinda love the “it’s definitely wrong or taken out of context, but once I’ll have finished telling the story we’ll have forgotten about that caveat” vibe that comes with this disclaimer.
Sony is no stranger to throwing spaghetti at the whole to see which stick, I mean they have are a movie studio in Japan too, and no they’re not throwing homeruns after homeruns all year long.
Also that’s a pretty good joke reply I think.
Both of these companies have significant (ie decades) of original material to draw upon. For the last 20 years, superhero movies have absolutely dominated the theaters.
But no one would look at this situation and draw any conclusion other than Marvel has trounced DC. Is the Marvel source material just that much better? IMHO it isn't to a significant enough degree.
What is different is execution. Marvel IP has just been better managed and they've had and built a better organization around it. It's drawn on Disney's extensive pedigree in this business.
Producing original content is difficult. It requires a culture of putting up with the 10 flops for that 1 breakout hit. There is no formula for that 1 breakout hit. A million factors go into why that hit became a hit and it's not a formula that can be copied and reproduced as the VC funding model demands.
It spent $4 billion on the company in 2009. They’ve easily made $100b off of the films, TV shows, comics, merchandise, theme park rides, etc.
I wholly agree with your point re: content that it has the culture of 10 flops for every hit. But that studio model, which has always existed in Hollywood, is the same model and a VC fund. Instead of going public, you get sequels or branch into other IP.
Are the returns the same? Generally no. But a good acquisition, like Marvel and Star Wars for Disney and Harry Potter (and to a lesser but historically significant degree, DC Comics) for Warner Bros, can pay dividends the exact same way as investing in a future tech titan.
It could be argued that it’s less about creating content than transforming content (craft mastery and artistry is still required, but the concept is pretty different).
That’s also where I think Netflix isn’t that much in trouble based only on its business model.
But it doesn’t work with game creation. You can’t just transform source material (original or not), it needs completely different innovative elements.
To note, game franchises also exist, but while they are wildly profitable I’d see that as a well guarded niche.
- it could still take any best seller book from the past 5 centuries and make it a script
- it could take any ancient story / non controversial religion gods / legend and turn into a script
- it could autogenerate stories from an AI until something that makes sense comes out and adapt that into a movie
I really think the input part is a solved problem, as long as there is enough talent to make it into a decent movie, and this part is move forgiving of "deja vu" and repeating the same techniques (nobody's gonna throw a fit because the director reused a shooting angle from a previous movie, at most it will be a meh moment)
Wrong, unless you measure "content" by "minutes of screen time."
If you measure it by box office, then we can easily prove you wrong. Many of the other commenters have already done that.
For every MCU there's a Fantastic Four standalone or a Universal Monsters Universe or a Percy Jackson or a Golden Compass or Narnia or other never-to-be-finished would-be franchises... or even just a Star Wars: Solo on the "hmm this isn't paying off after all actually even if it's not a bomb" front. And those were all existing IP, even!
Remember Angry Birds? Rovio took VC funding. How did that work out?
Netflix arguably may have run itself into insolvency by overspending on original content to the point where it enters a death spiral of losing subscribers and raising subscription prices to compensate.
Just because you create 1 successful game or TV show or movie doesn't mean that if someone hands you a large check you can't create 10 more just as successful. It doesn't even mean your organically successful original content will remain successful.
Of course there are successful franchies in gaming (eg Call of Duty, Halo, Assassin's Creed). These may end up being worth something and do have an inbuilt audience so they scale better ut they still take significant work.