8 ms·

Netflix is $20B in debt. Can it keep borrowing its way to success?

105 points by JackPoach 9y ago

mnm1 9y ago
Success is independent of the quality of the product, but if the quality of the product is any indication, I'd say it's unlikely. After being a Netflix subscriber for over a decade, I finally pulled the plug. Their "original" series include some great shows but also include a lot of crap. Almost everything else is garbage. They got rid of the star rating system which was the only thing sort of making discovery of the few non-garbage items possible. Even when they had the star rating system, you couldn't sort by stars because they didn't want you to see all the garbage in the system. They cannot produce or license, it seems, new shows fast enough to justify the $10 or so a month anymore. Licenses expire and good content goes away. The list of problems is almost never ending and instead of improving the platform, they're making it worse. Even "House of Cards" was rather disappointing this season. I don't see them turning this around with one or two good shows every year.
- jlebrech 9y ago
  maybe they should partner with IMDB to see what content that isn't available that their customers want, or even make Netflix free (with only the option to watch pilot shows or old classic movies) and additional option to put shows and movies into a wishlist whether it's part of the catalogue or not.
  - lorenzfx 9y ago
    As IMDB is part of amazon this seems rather unlikely.
  - emsy 9y ago
    In a story posted a few weeks ago a user pointed out that Netflix doesn't need to show customers the best recommendations, but good enough ones too keep them paying. Ideally they could phase out pricey licenses and keep them at bay with Netflix originals. Which is a good recommendation system, but for Netflix' business model.
- Washuu 9y ago
  This weekend I spent about twenty minutes using their terrible "discovery" interface then finally resorting to a third party web site to determine if any of the twenty to thirty year old movies I wanted to watch were available. All them were on Netflix, but only available outside the USA. Amazon Prime Video was just as bad.
- puranjay 9y ago
  Same here. Ended my subscription last week. First, the movie library in my country is very weak. Second, the TV library is becoming filled so fast with so much crap that I don't even know what to watch. Selecting the right show has become such a massive chore that I don't even try anymore. There is no way to "preview" a show (as I would on regular TV if I was just browsing around). I truly feel paralysis by analysis when I open my Netflix app. Part of me wants to go back to old cable days. It was just so much more convenient to watch TV. Switch on, flip channels, catch something you like. Follow-up if you loved it, otherwise forget it. With Netflix, the fact that I have to make a choice from its unending supply of mediocre shows makes watching anything harder. Netflix seriously needs some sort of a radio-like, "always on" option that I can just put on my TV when I feel like watching something
  - continuational 9y ago
    A "watch something random" + "skip to next random thing" might actually give us everything broadcasting had to offer with very little efford!
    - BinaryIdiot 9y ago
      It would have to be better than random, though. With "channel surfing" of the old days you would cross channels with themes but obviously Netflix has algorithms that would make this better. The biggest UX issue, IMO, is getting the channel surfing UX perfect. It must not show buffering or loading but an instant change between shows as I flip through. That's so much harder with digital I can't think of the last time I felt something pull off something as good as the analog. But yes this would be a HUGE help with my show selection as well.
      - dzhiurgis 9y ago
        Is it really that difficult? Keep 100mb of cache, perhaps 10 shows, 10mb each, potentially overcompressed, as audio is the key. All starting at interesting place, not at intro.
- faceyspacey 9y ago
  I disagree. I think for $10 bucks and that I only watch 4-8 episodes per month it's perfect. I can barely get through all the good content. That said a few years back I would watch way more and exhausted what appealed to me in Netflix's catalog, as it sounds you have. I think the idea is you just gotta compare what else costs $10 bucks. Um lunch, maybe. So if you have realistic expectations for what you get for $10 bucks and don't watch "too much" TV, it's perfect.
  - Camillo 9y ago
    Ten dollar bucks.
- bshimmin 9y ago
  I will admit I found it hard not to read this comment and wonder about your sense of entitlement in the face of the vastly privileged situation we live in now in terms of media consumption. You pay $10 per month to watch high quality TV from the last few decades as much as you want, whenever you want (and, goodness me, if you have children, Netflix is an absolute godsend - fire up Paw Patrol and off you go...); to watch a large and moderately decent selection of films, often including relatively new releases, whenever you want, as many as you want; and as if that weren't enough, they even produce their own content, some of which is actually good. I remember when, if you wanted to watch a film, you would drive to Blockbuster and rent it, and you had a couple of nights to watch it or the fees would start racking up - and their selection was never all that great, and the availability was limited to how many DVDs or videos they physically had. If you wanted to watch a TV series, you'd buy the boxset - and before DVDs, Friends took up about four feet of your bookshelf. Sure, I've seen a bit of a movement lately from Netflix to Amazon Prime, but seriously, what we have right now in 2017 is so miraculously much better than what we had ten years ago (when I had a LoveFilm account and had to rely on films being sent through the post - which seems oddly even more antiquated now than Blockbuster does, frankly), that to describe it as "crap" and "garbage" just seems crazy to me.
  - taway_1212 9y ago
    > high quality TV I think he's debating this part. Frankly, most of TV is mind-rotting crap.
  - mythrwy 9y ago
    You drove to Blockbuster? Luxury. I built a treestand behind the drive in theater and sat in it with a AM radio and can of mosquito spray. And they only had one film.
  - tanilama 9y ago
    This is typical HN: Nothing can please me because I am intelligent advanced than the rest of the crowd. Instead acting like whiny baby. The suggestion that Netflix get rid of scale rating is pure conspiracy, without any evidence to back it up. Reminders: 1. Youtube Red: 10 dollars 2. HBO Now: 15 dollars 3. Amazon Prime: 9 dollars 4. Youtube TV: 35 dollars 5. Watch a movie: 10 dollars on average. Maybe the OP is suggesting piracy? That is the only way I could bring out of my mind for cheaper price for any (relatively) well produced content.
- jondubois 9y ago
  A lot of very popular products these days have bad UI. I often find myself using Google to figure out how to do the simplest things. Managers just make random decisions.
- gcp 9y ago
  They got rid of the star rating system which was the only thing sort of making discovery of the few non-garbage items possible. It's quite interesting given that they organized a huge machine learning competition just for that.
erikb 9y ago
Having debt is not a big deal, it's not so different from having investors. Investor gives you money for guaranteed say in your business strategy. He may get some interest on his investment or not, no guarantee. Banker gives debt for guaranteed interest and may get something to say in your company but usually not.
- loeber 9y ago
  Having debt is structurally completely different from having (equity) investors. The entire financial incentive, risk, and payout structure behind taking on debt is unlike that of selling off equity. In this case, Netflix is much worse off having taken on large amounts of debt. I hope this response isn't too brusque, but I strongly suggest you read an introductory finance textbook.
  - rayalez 9y ago
    Could you summarize what makes debt worse than having investors? I'm curious, it seems counterintuitive, with debt you don't have to give up a part of your company or lose any control.
    - continuations 9y ago
      Debt usually comes with strict repayment schedule. If you don't have enough cash flow to meet the repayment schedule you go into default. The debt holders force you into bankruptcy. You lose the entire company.
      - erikb 9y ago
        Well, does a creditor have to push you into bankruptcy? They seldomly do, because then they can't squeeze more money or control out of you. And at the same time an investor could also push you into bankruptcy by suggesting, supporting or blocking certain decisions. It's like knight and bishop in chess. True, they work differently, but they are all just pieces on the same board, used in the same game to achieve the same goal.
holydude 9y ago
Does anyone know about Netflix's publishing of its own content outside of US ? The trick for me is that at least this could be available to everyone..but for some reason it was not so when I was looking at netflix few months ago.
- matthewrudy 9y ago
  The UK has a good selection in general, but living before in Hong Kong the selection was very sparse, including from Netflix's own content.
- evan_ 9y ago
  Part of it is that a lot of Netflix's "original" content is actually just Netflix acting as the US distributor for stuff someone else has produced- other countries may get distributed through other platforms.
  - vertex-four 9y ago
    The same happens the other way round elsewhere. For example, Orphan Black is a BBC America production, but is a Netflix Original in the UK and Ireland. There's a bunch of anime that is branded a Netflix Original too, which just feels weird.
    - dwighttk 9y ago
      huh... and it is on Amazon in the US
      - vertex-four 9y ago
        We've been getting episodes from season 5 every Tuesday - I assume you only have up to season 4 there.
        dwighttk 9y ago
        yeah, looks like it (I don't have prime)
Fifer82 9y ago
$20B looks so innocent, but that is a staggering amount of money. From merely grazing NH, I feel like Netflix seems to "Secure 2 billion investment" every couple of months. I had the impression the company was essentially working as a street sweeper with a 20 million pound credit card limit. These documents https://ir.netflix.com/results.cfm https://ir.netflix.com/results.cfm show it is picking up 2.5 billion a quarter. I am pretty speechless.
- rainbowmverse 9y ago
  They're trying to fill the vacuum left by shows they once licensed cheaply and easily. It's all fanning out to other services on better terms. If they don't do this, their library keeps shrinking and dropping in quality. Enough people like Netflix's originals to keep them from losing paying customers as licensed content flees, so it seems like a wise investment.
amelius 9y ago
Because of progress of technology, in a few years everybody (with a few millions to spare) can start a film-streaming business. And then there are the big guys such as Amazon and Google.
- cm2187 9y ago
  But do you expect end users to pay for a dozen streaming subscription every month?
  - voltagex_ 9y ago
    I mean, depending on what shows you want to watch, you might have to pay for Hulu Plus, Amazon and Netflix.
    - cm2187 9y ago
      This fragmentation goes in the wrong direction. You don't want to have to go to a specific music streaming service if you want to listen to artist A and then have to switch to another service for the next item in your playlist. Same for movies and TV shows. Convenience is a major factor in reducing movie piracy.
      - amelius 9y ago
        Hosting all content with one provider goes against the principles of the internet. So the solution is that the internet figures out how to do (micro) payments easily.
        cm2187 9y ago
        No but you can dissociate content creators and providers. Like Universal Studios wouldn't care whether people are viewing their movies on netflix, HBO, amazon, apple, as long as they get the royalties. And that creates less vendor lockin, more competition on content.
saimiam 9y ago
A product like Netflix cannot actually monopolise its marketplace because at the end of the day, they are selling a very well understood, easily replicated goods - namely content. Unless we went back to the big studio era when talent was locked up with multi year contracts, nothing can stop a Hulu from poaching a great show runner from NFLX. Under such a scenario, I don't quite see why N belongs with the other big kids of F-A-A-N-G. Its long term success is suspect to me, debt or not.
- dwighttk 9y ago
  sounds better than F-A-A-G
- aphexbr 9y ago
  "they are selling a very well understood, easily replicated goods - namely content" No, they're not. They're selling a service that allows you to rent content and have it stream to you instantly. The content library is what attracts people, of course, but their core business is selling the service. "Unless we went back to the big studio era when talent was locked up with multi year contracts" Erm, they already produce Netflix Originals, which are exclusively locked up on there (and their competitors all do the same thing). How does that differ from your suggestion? "nothing can stop a Hulu from poaching a great show runner from NFLX" ...and nothing can stop Netflix from getting the licence to a show that used to be on Hulu. Also nothing to stop them both licencing the same show at the same time. "Its long term success is suspect to me, debt or not." Just Netflix, or do you also think that Hulu, Mubi, Filmstruck, etc. are all doomed as well? (I left Amazon out because obviously Prime streaming obviously isn't their core market) If just Netflix, what differs in your view that makes them more vulnerable to their competition?
  - saimiam 9y ago
    Apart from your point about Netflix selling access to content rather than content itself (which I'll get to), I feel you are making exactly the same point as I am without your realizing it. Netflix is trafficking in a commodity over which it cannot have monopolistic control. Take, for example, your own instance - licensing shows which used to be on Hulu. Producing originals isn't something only NFLX has the expertise to do. AMC was home to some of the best shows of this century. No monopoly for NFLX there. For NFLX to be spoken of at the same level as FB, Goog, and Amazon, I'd have thought they had an insurmountable moat - Social in the case of FB, search relevance for GOOG, and 2-day fulfillment for AMZN. When I don't see a monopoly, I start to wonder why NFLX is so loved by Wall Street and not treated as a commodity like any other content channel is. I suspect NFLX will end up being just another dividend paying stock like a utility. That's not a failure at all but it isn't ever going to justify being gushed about along with the other companies in FAANG. Back to your point about a service which lets me rent content - that would be true if they were truly a content aggregator which lets anyone including Hulu serve content to renters and kept a haircut for themselves. Amazon's Marketplace is a great example of service which is designed purely to act as a platform for 1st and 3rd party vendors. Obviously, right now, NFLX isn't interested in this.
nstart 9y ago
Off topic. Was browsing on mobile Firefox. I've revoked permissions to access the camera. This site asked for permissions to access it. Not entirely sure why but it might be useful for others to know
- gcp 9y ago
  I didn't get this, but the site is pulling tons of ads from all kinds of places, so god knows where that was coming from. Enable tracking protection or use uBlock Origin. Did you mean you revoked and it still asked, or it asked, and you revoked?
omi 9y ago
No, NFLX is a zero.
greggman 9y ago
maybe it's just me but I really hate being tracked by what TV shows and movies I watch. I also hate the suggestions and that I can't edit them and ban them. I don't know why it bothers me less on the computer with say YouTube. possibly because I can open YouTube links in an incognito window when I don't want it to be part of my profile. Let's say some show that stars some actor I detest for whatever reason , or some show I detest because of what it's preaching. It will be the first thing I see on my large TV every time I turn it on. Imagine if every time you turned on your TV you were present with a picture of your ex with whom you had a bad breakup and no way to take it off the TV except to wait for Netflix to stop recommending it. I get that type feeling from almost no where else. Needless to say I canceled my account.
- intoverflow2 9y ago
  >I also hate the suggestions and that I can't edit them and ban them. I don't know why it bothers me less on the computer with say YouTube. This bothers me way more on YouTube because all the thumbnails are just people pulling "The YouTube Face" because its a form of clickbait that works well with kids. Watch one video about PCs and YT will spam your recommendations with Linus Tech Tips pulling childish faces till the end of time. Same goes for Videogames and PewDiePie, Minecrafters or whatever. Blocking the users has no effect on the algorithm.
- aphexbr 9y ago
  "I also hate the suggestions and that I can't edit them and ban them." If you thumb down a suggestion it will usually disappear from the suggestions list. Also, if you keep getting suggestions based on something watched that you didn't like, you can edit you viewing history and remove it.
- greggman 9y ago
  I see this was downvoted, not clear why. Let me point out that a video store telling someone what videos you rented was outlawed https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act In other words, I'm not the only person who thinks others shouldn't be able to know your video watching history. I'd personally like to see it outlawed that sharing a profile of your video watching history also be outlawed. In other words, while the law above is about the actual movies I don't want Netflix (or any other company) to be able to share even the type of movie. It's one thing for Netflix to use that data to recommend movies. It's another for Netflix to be able to sell a profile of me (likes action movies) or likes (likes sexploitation movies) or (likes movies with LGBT themes). That last one I think really makes the point clear. Netflix should not be able to out you to other companies and that means it should be illegal for them to share your profile even if it doesn't include your actual watching history. I'd argue the same should be true for Google. They should probably be allowed to profile you and then let advertises say "I would like to target my ads to people who fit profiles X, Y, and Z" but Google should not be allowed to share that profile outside of Google.
jondubois 9y ago
I wonder where the $20B figure came from, Google finance says that they only have about $3 billion in debt. https://www.google.com/finance?q=NASDAQ%3ANFLX&fstype=ii&ei=r_R-WciXGo6LUtqujcAD https://www.google.com/finance?q=NASDAQ%3ANFLX&fstype=ii&ei=... $3B looks sustainable given their net annual income of $200 million but $20B does not - Especially with interest rates going up again. Whenever I read about a software company needing that kind of money though, I often wonder why... Especially when I also hear stories about companies like Whatsapp and Instagram being able to scale their businesses to hundreds of millions of users using very small engineering teams and advertising budgets. I've had a recurring thoughts that maybe big tech companies are conspiring together to hire as many software engineers as possible to make sure that those engineers don't have any time to build competing products. Software engineering talent is thus an artificially created scarcity. If that's the case then I don't think that is sustainable.
- Aeolun 9y ago
  If they have some 100M+ subscribers, wouldn't their net income be at least 600M * 12 = 7.2B? Given around $6 per subscriber per month?
  - wrren 9y ago
    That would be gross income, net income is income after all costs have been deducted. That would indicate that their annual costs are ~$7B, most of which probably goes towards producing new shows and licensing existing ones.
    - abhi3 9y ago
      Actually, 7.2 Billion is the revenue. Gross Income is Revenue minus Direct Costs, while Net income is Revenue minus All Costs
  - akira2501 9y ago
    8.8B in revenue in 2016, up from 6.7B in 2015. Also in 2016, 3.3B in long term debt, offset by nearly 2.8B in cash, equivalents and capital. All of this on top of 11.0B worth of content. Source, most recent NFLX 10-K, page 16. http://files.shareholder.com/downloads/NFLX/4903229026x0xS1628280-17-496/1065280/filing.pdf http://files.shareholder.com/downloads/NFLX/4903229026x0xS16...
verytrivial 9y ago
So, assuming Netflix goes belly up at some point, I am MUCH happier they spent $20B making shed-loads of new content (i.e. paying out to creative and production people) that will live on than e.g. putting it in a pile and burning it like the Facebook / Whatsapp $16B "valuation". That value just disappears IMHO.
jasonkostempski 9y ago
Im sure most of the $9 a month I used to spend went to paying for licensed content but I watched probably 80% original content. I left because of DRM. I don't know if it would be a money making venture for them but, for $5 a month, I would subscribe to a Netflix Original content only, DRM free service if they offered it. Seems like it'd be easy for them to do a trial run of such a thing.
- gcp 9y ago
  What's the exact part of the DRM that bothers you? Personally I hate the restrictions such as "4K only on Kaby Lake with Edge etc" and I downgraded my subscription because of it.
  - jasonkostempski 9y ago
    All parts of DRM bother me equally.
- aphexbr 9y ago
  You won't get DRM free, because Netflix don't sell you the content, they rent it. Or, more specifically, they sell you access to the platform to stream the rented content. I'm all for DRM-free purchases, but you're never going to get DRM-free rentals.
  - jasonkostempski 9y ago
    Their stuff, and everyone elses, is easily available for download, DRM free, without a fee of any kind. DRM has never stopped that. Netflix knows that. I have no doubt DRM is required for every contract they have with other studios, but they could show they're not fools by allowing me to stream their original content without having to allow closed, proprietary binaries to run on my machine to do it. I have no interest in maintaining terabytes of video and manually managing distribution to multiple device. I don't think many people would. I'd rather pay the $5 a month. I won't enable DRM in my browser, ever.
wweidendorf 9y ago
Very misleading article - per the company's latest 10-Q, they only have $4.8 billion in debt. On a net leverage basis, they are currently around 3.2x net debt / EBITDA which is down the fairway for most high yield public companies. The remainder of their "debt" as the article lays it out is in Streaming Content Obligations and is not debt as you and I would think about it. Yes, it is contractually committed; however, unlike debt, they likely can default on their obligations and the only recourse would be a lawsuit for either damages or specific performance. (There is also no interest payment - as interest expense on $15.7 billion would be significant relative to their current debt burden.) Compared to true debt instruments, which carry covenants that allow the debtholders to push the company into bankruptcy, the streaming content obligations very likely do not have any such ability to do so. (From what I can tell, the cross-default clauses in their debt instruments do not trigger in the event that they do not fulfill their streaming content obligations.)
- monochromatic 9y ago
  Do the streaming content obligations explicitly say that the "creditor" can't initiate bankrupt proceedings or something? This seems strange.
  - justQuestion2 9y ago
    How are these obligation computed? 1. If I subscribe to Netflix for a year for 10$/month and pay in advance at the beginning of ther period, does this result in 120$ of streaming obligations? 2. Or do the record the costs needed to fulfill the order?
thinkMOAR 9y ago
If Musk can keep living on credit based on 'his company status', i am quite sure that netflix will be able too. Though god knows where that 20 billion debt in the article actually comes from...
- erikpukinskis 9y ago
  Tesla's line of credit isn't due to "status" it's due to past performance. They have consistently doubled sales and production every 18 months or so since they began selling cars, and have orders on the books showing at least as much growth for the next several years. What "status" do you think Tesla has that makes them a target for creditors? You think Deutsche Bank just thinks Elon Musk is cool and hip?
  - thinkMOAR 9y ago
    Performance/status is more then just black numbers down at the end of the balance. The status of super popular by huge volumes of people. So in essence yes because he is so cool, hip, and also because he creates/thinks of things that appeal to the mass, and people cannot stop talking about it on birthday parties and events alike. disclaimer, i drive a 20 yo toyota and own nothing of tesla.
samfisher83 9y ago
You can look at their latest balance sheet and you can tell all their liabilities don't add up to 20 billion. Long Term debt is 4.3billion.
pgeorgep 9y ago
Netflix can do whatever they want. They are growing at such a crazy rate, they will Amazon their way to a profitable company (burn billions to make billions)
gumboshoes 9y ago
"$20B in debt" is not the same as "carrying $20 billion in debt." Those are very different business traits!
lifeisstillgood 9y ago
I have an odd thought - Netflix is going about its new commissioning process all wrong. lokking at Netflix from the POV of "innovators dilemma" they are the low end upstart coming to steal the studio / broadcasters lunch But having the broadcasters lunch on its lips it is now trying to copy the studios at their own game - creating high quality must watch content. I think that's the wrong game. One of my favourite discoveries on Netflix was "chaos on the bridge" where Shatner narrated a documentary on the first few years of Star Trek NG. It was fun, had almost zero cost apart from some talking heads and the researcher time. A similar one on Atari, and the rise of Compaq all made me think that documentaries would be the new magazines - something for everyone's interest and dirt cheap to make - and with not much skill will eat up 50 mins of my time as easily as a GoT episode Just wondering if they are not getting above themselves?

105 points by JackPoach 9y ago

mnm1 9y ago

Success is independent of the quality of the product, but if the quality of the product is any indication, I'd say it's unlikely. After being a Netflix subscriber for over a decade, I finally pulled the plug. Their "original" series include some great shows but also include a lot of crap. Almost everything else is garbage. They got rid of the star rating system which was the only thing sort of making discovery of the few non-garbage items possible. Even when they had the star rating system, you couldn't sort by stars because they didn't want you to see all the garbage in the system. They cannot produce or license, it seems, new shows fast enough to justify the $10 or so a month anymore. Licenses expire and good content goes away. The list of problems is almost never ending and instead of improving the platform, they're making it worse. Even "House of Cards" was rather disappointing this season. I don't see them turning this around with one or two good shows every year.

jlebrech 9y ago
maybe they should partner with IMDB to see what content that isn't available that their customers want, or even make Netflix free (with only the option to watch pilot shows or old classic movies) and additional option to put shows and movies into a wishlist whether it's part of the catalogue or not.
- lorenzfx 9y ago
  As IMDB is part of amazon this seems rather unlikely.
- emsy 9y ago
  In a story posted a few weeks ago a user pointed out that Netflix doesn't need to show customers the best recommendations, but good enough ones too keep them paying. Ideally they could phase out pricey licenses and keep them at bay with Netflix originals. Which is a good recommendation system, but for Netflix' business model.
Washuu 9y ago
This weekend I spent about twenty minutes using their terrible "discovery" interface then finally resorting to a third party web site to determine if any of the twenty to thirty year old movies I wanted to watch were available. All them were on Netflix, but only available outside the USA. Amazon Prime Video was just as bad.
puranjay 9y ago
Same here. Ended my subscription last week. First, the movie library in my country is very weak. Second, the TV library is becoming filled so fast with so much crap that I don't even know what to watch. Selecting the right show has become such a massive chore that I don't even try anymore. There is no way to "preview" a show (as I would on regular TV if I was just browsing around). I truly feel paralysis by analysis when I open my Netflix app. Part of me wants to go back to old cable days. It was just so much more convenient to watch TV. Switch on, flip channels, catch something you like. Follow-up if you loved it, otherwise forget it. With Netflix, the fact that I have to make a choice from its unending supply of mediocre shows makes watching anything harder. Netflix seriously needs some sort of a radio-like, "always on" option that I can just put on my TV when I feel like watching something
- continuational 9y ago
  A "watch something random" + "skip to next random thing" might actually give us everything broadcasting had to offer with very little efford!
  - BinaryIdiot 9y ago
    It would have to be better than random, though. With "channel surfing" of the old days you would cross channels with themes but obviously Netflix has algorithms that would make this better. The biggest UX issue, IMO, is getting the channel surfing UX perfect. It must not show buffering or loading but an instant change between shows as I flip through. That's so much harder with digital I can't think of the last time I felt something pull off something as good as the analog. But yes this would be a HUGE help with my show selection as well.
    - dzhiurgis 9y ago
      Is it really that difficult? Keep 100mb of cache, perhaps 10 shows, 10mb each, potentially overcompressed, as audio is the key. All starting at interesting place, not at intro.
faceyspacey 9y ago
I disagree. I think for $10 bucks and that I only watch 4-8 episodes per month it's perfect. I can barely get through all the good content. That said a few years back I would watch way more and exhausted what appealed to me in Netflix's catalog, as it sounds you have. I think the idea is you just gotta compare what else costs $10 bucks. Um lunch, maybe. So if you have realistic expectations for what you get for $10 bucks and don't watch "too much" TV, it's perfect.
- Camillo 9y ago
  Ten dollar bucks.
bshimmin 9y ago
I will admit I found it hard not to read this comment and wonder about your sense of entitlement in the face of the vastly privileged situation we live in now in terms of media consumption. You pay $10 per month to watch high quality TV from the last few decades as much as you want, whenever you want (and, goodness me, if you have children, Netflix is an absolute godsend - fire up Paw Patrol and off you go...); to watch a large and moderately decent selection of films, often including relatively new releases, whenever you want, as many as you want; and as if that weren't enough, they even produce their own content, some of which is actually good. I remember when, if you wanted to watch a film, you would drive to Blockbuster and rent it, and you had a couple of nights to watch it or the fees would start racking up - and their selection was never all that great, and the availability was limited to how many DVDs or videos they physically had. If you wanted to watch a TV series, you'd buy the boxset - and before DVDs, Friends took up about four feet of your bookshelf. Sure, I've seen a bit of a movement lately from Netflix to Amazon Prime, but seriously, what we have right now in 2017 is so miraculously much better than what we had ten years ago (when I had a LoveFilm account and had to rely on films being sent through the post - which seems oddly even more antiquated now than Blockbuster does, frankly), that to describe it as "crap" and "garbage" just seems crazy to me.
- taway_1212 9y ago
  > high quality TV I think he's debating this part. Frankly, most of TV is mind-rotting crap.
- mythrwy 9y ago
  You drove to Blockbuster? Luxury. I built a treestand behind the drive in theater and sat in it with a AM radio and can of mosquito spray. And they only had one film.
- tanilama 9y ago
  This is typical HN: Nothing can please me because I am intelligent advanced than the rest of the crowd. Instead acting like whiny baby. The suggestion that Netflix get rid of scale rating is pure conspiracy, without any evidence to back it up. Reminders: 1. Youtube Red: 10 dollars 2. HBO Now: 15 dollars 3. Amazon Prime: 9 dollars 4. Youtube TV: 35 dollars 5. Watch a movie: 10 dollars on average. Maybe the OP is suggesting piracy? That is the only way I could bring out of my mind for cheaper price for any (relatively) well produced content.
jondubois 9y ago
A lot of very popular products these days have bad UI. I often find myself using Google to figure out how to do the simplest things. Managers just make random decisions.
gcp 9y ago
They got rid of the star rating system which was the only thing sort of making discovery of the few non-garbage items possible. It's quite interesting given that they organized a huge machine learning competition just for that.

erikb 9y ago

Having debt is not a big deal, it's not so different from having investors. Investor gives you money for guaranteed say in your business strategy. He may get some interest on his investment or not, no guarantee. Banker gives debt for guaranteed interest and may get something to say in your company but usually not.

loeber 9y ago
Having debt is structurally completely different from having (equity) investors. The entire financial incentive, risk, and payout structure behind taking on debt is unlike that of selling off equity. In this case, Netflix is much worse off having taken on large amounts of debt. I hope this response isn't too brusque, but I strongly suggest you read an introductory finance textbook.
- rayalez 9y ago
  Could you summarize what makes debt worse than having investors? I'm curious, it seems counterintuitive, with debt you don't have to give up a part of your company or lose any control.
  - continuations 9y ago
    Debt usually comes with strict repayment schedule. If you don't have enough cash flow to meet the repayment schedule you go into default. The debt holders force you into bankruptcy. You lose the entire company.
    - erikb 9y ago
      Well, does a creditor have to push you into bankruptcy? They seldomly do, because then they can't squeeze more money or control out of you. And at the same time an investor could also push you into bankruptcy by suggesting, supporting or blocking certain decisions. It's like knight and bishop in chess. True, they work differently, but they are all just pieces on the same board, used in the same game to achieve the same goal.

holydude 9y ago

Does anyone know about Netflix's publishing of its own content outside of US ? The trick for me is that at least this could be available to everyone..but for some reason it was not so when I was looking at netflix few months ago.

matthewrudy 9y ago
The UK has a good selection in general, but living before in Hong Kong the selection was very sparse, including from Netflix's own content.
evan_ 9y ago
Part of it is that a lot of Netflix's "original" content is actually just Netflix acting as the US distributor for stuff someone else has produced- other countries may get distributed through other platforms.
- vertex-four 9y ago
  The same happens the other way round elsewhere. For example, Orphan Black is a BBC America production, but is a Netflix Original in the UK and Ireland. There's a bunch of anime that is branded a Netflix Original too, which just feels weird.
  - dwighttk 9y ago
    huh... and it is on Amazon in the US
    - vertex-four 9y ago
      We've been getting episodes from season 5 every Tuesday - I assume you only have up to season 4 there.
      - dwighttk 9y ago
        yeah, looks like it (I don't have prime)

Fifer82 9y ago

$20B looks so innocent, but that is a staggering amount of money. From merely grazing NH, I feel like Netflix seems to "Secure 2 billion investment" every couple of months. I had the impression the company was essentially working as a street sweeper with a 20 million pound credit card limit. These documents https://ir.netflix.com/results.cfm https://ir.netflix.com/results.cfm show it is picking up 2.5 billion a quarter. I am pretty speechless.

rainbowmverse 9y ago
They're trying to fill the vacuum left by shows they once licensed cheaply and easily. It's all fanning out to other services on better terms. If they don't do this, their library keeps shrinking and dropping in quality. Enough people like Netflix's originals to keep them from losing paying customers as licensed content flees, so it seems like a wise investment.

amelius 9y ago

Because of progress of technology, in a few years everybody (with a few millions to spare) can start a film-streaming business. And then there are the big guys such as Amazon and Google.

cm2187 9y ago
But do you expect end users to pay for a dozen streaming subscription every month?
- voltagex_ 9y ago
  I mean, depending on what shows you want to watch, you might have to pay for Hulu Plus, Amazon and Netflix.
  - cm2187 9y ago
    This fragmentation goes in the wrong direction. You don't want to have to go to a specific music streaming service if you want to listen to artist A and then have to switch to another service for the next item in your playlist. Same for movies and TV shows. Convenience is a major factor in reducing movie piracy.
    - amelius 9y ago
      Hosting all content with one provider goes against the principles of the internet. So the solution is that the internet figures out how to do (micro) payments easily.
      - cm2187 9y ago
        No but you can dissociate content creators and providers. Like Universal Studios wouldn't care whether people are viewing their movies on netflix, HBO, amazon, apple, as long as they get the royalties. And that creates less vendor lockin, more competition on content.

saimiam 9y ago

A product like Netflix cannot actually monopolise its marketplace because at the end of the day, they are selling a very well understood, easily replicated goods - namely content. Unless we went back to the big studio era when talent was locked up with multi year contracts, nothing can stop a Hulu from poaching a great show runner from NFLX. Under such a scenario, I don't quite see why N belongs with the other big kids of F-A-A-N-G. Its long term success is suspect to me, debt or not.

dwighttk 9y ago
sounds better than F-A-A-G
aphexbr 9y ago
"they are selling a very well understood, easily replicated goods - namely content" No, they're not. They're selling a service that allows you to rent content and have it stream to you instantly. The content library is what attracts people, of course, but their core business is selling the service. "Unless we went back to the big studio era when talent was locked up with multi year contracts" Erm, they already produce Netflix Originals, which are exclusively locked up on there (and their competitors all do the same thing). How does that differ from your suggestion? "nothing can stop a Hulu from poaching a great show runner from NFLX" ...and nothing can stop Netflix from getting the licence to a show that used to be on Hulu. Also nothing to stop them both licencing the same show at the same time. "Its long term success is suspect to me, debt or not." Just Netflix, or do you also think that Hulu, Mubi, Filmstruck, etc. are all doomed as well? (I left Amazon out because obviously Prime streaming obviously isn't their core market) If just Netflix, what differs in your view that makes them more vulnerable to their competition?
- saimiam 9y ago
  Apart from your point about Netflix selling access to content rather than content itself (which I'll get to), I feel you are making exactly the same point as I am without your realizing it. Netflix is trafficking in a commodity over which it cannot have monopolistic control. Take, for example, your own instance - licensing shows which used to be on Hulu. Producing originals isn't something only NFLX has the expertise to do. AMC was home to some of the best shows of this century. No monopoly for NFLX there. For NFLX to be spoken of at the same level as FB, Goog, and Amazon, I'd have thought they had an insurmountable moat - Social in the case of FB, search relevance for GOOG, and 2-day fulfillment for AMZN. When I don't see a monopoly, I start to wonder why NFLX is so loved by Wall Street and not treated as a commodity like any other content channel is. I suspect NFLX will end up being just another dividend paying stock like a utility. That's not a failure at all but it isn't ever going to justify being gushed about along with the other companies in FAANG. Back to your point about a service which lets me rent content - that would be true if they were truly a content aggregator which lets anyone including Hulu serve content to renters and kept a haircut for themselves. Amazon's Marketplace is a great example of service which is designed purely to act as a platform for 1st and 3rd party vendors. Obviously, right now, NFLX isn't interested in this.

nstart 9y ago

Off topic. Was browsing on mobile Firefox. I've revoked permissions to access the camera. This site asked for permissions to access it. Not entirely sure why but it might be useful for others to know

gcp 9y ago
I didn't get this, but the site is pulling tons of ads from all kinds of places, so god knows where that was coming from. Enable tracking protection or use uBlock Origin. Did you mean you revoked and it still asked, or it asked, and you revoked?

omi 9y ago

No, NFLX is a zero.

greggman 9y ago

maybe it's just me but I really hate being tracked by what TV shows and movies I watch. I also hate the suggestions and that I can't edit them and ban them. I don't know why it bothers me less on the computer with say YouTube. possibly because I can open YouTube links in an incognito window when I don't want it to be part of my profile. Let's say some show that stars some actor I detest for whatever reason , or some show I detest because of what it's preaching. It will be the first thing I see on my large TV every time I turn it on. Imagine if every time you turned on your TV you were present with a picture of your ex with whom you had a bad breakup and no way to take it off the TV except to wait for Netflix to stop recommending it. I get that type feeling from almost no where else. Needless to say I canceled my account.

intoverflow2 9y ago
>I also hate the suggestions and that I can't edit them and ban them. I don't know why it bothers me less on the computer with say YouTube. This bothers me way more on YouTube because all the thumbnails are just people pulling "The YouTube Face" because its a form of clickbait that works well with kids. Watch one video about PCs and YT will spam your recommendations with Linus Tech Tips pulling childish faces till the end of time. Same goes for Videogames and PewDiePie, Minecrafters or whatever. Blocking the users has no effect on the algorithm.
aphexbr 9y ago
"I also hate the suggestions and that I can't edit them and ban them." If you thumb down a suggestion it will usually disappear from the suggestions list. Also, if you keep getting suggestions based on something watched that you didn't like, you can edit you viewing history and remove it.
greggman 9y ago
I see this was downvoted, not clear why. Let me point out that a video store telling someone what videos you rented was outlawed https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act https://en.wikipedia.org/wiki/Video_Privacy_Protection_Act In other words, I'm not the only person who thinks others shouldn't be able to know your video watching history. I'd personally like to see it outlawed that sharing a profile of your video watching history also be outlawed. In other words, while the law above is about the actual movies I don't want Netflix (or any other company) to be able to share even the type of movie. It's one thing for Netflix to use that data to recommend movies. It's another for Netflix to be able to sell a profile of me (likes action movies) or likes (likes sexploitation movies) or (likes movies with LGBT themes). That last one I think really makes the point clear. Netflix should not be able to out you to other companies and that means it should be illegal for them to share your profile even if it doesn't include your actual watching history. I'd argue the same should be true for Google. They should probably be allowed to profile you and then let advertises say "I would like to target my ads to people who fit profiles X, Y, and Z" but Google should not be allowed to share that profile outside of Google.

jondubois 9y ago

I wonder where the $20B figure came from, Google finance says that they only have about $3 billion in debt. https://www.google.com/finance?q=NASDAQ%3ANFLX&fstype=ii&ei=r_R-WciXGo6LUtqujcAD https://www.google.com/finance?q=NASDAQ%3ANFLX&fstype=ii&ei=... $3B looks sustainable given their net annual income of $200 million but $20B does not - Especially with interest rates going up again. Whenever I read about a software company needing that kind of money though, I often wonder why... Especially when I also hear stories about companies like Whatsapp and Instagram being able to scale their businesses to hundreds of millions of users using very small engineering teams and advertising budgets. I've had a recurring thoughts that maybe big tech companies are conspiring together to hire as many software engineers as possible to make sure that those engineers don't have any time to build competing products. Software engineering talent is thus an artificially created scarcity. If that's the case then I don't think that is sustainable.

Aeolun 9y ago
If they have some 100M+ subscribers, wouldn't their net income be at least 600M * 12 = 7.2B? Given around $6 per subscriber per month?
- wrren 9y ago
  That would be gross income, net income is income after all costs have been deducted. That would indicate that their annual costs are ~$7B, most of which probably goes towards producing new shows and licensing existing ones.
  - abhi3 9y ago
    Actually, 7.2 Billion is the revenue. Gross Income is Revenue minus Direct Costs, while Net income is Revenue minus All Costs
- akira2501 9y ago
  8.8B in revenue in 2016, up from 6.7B in 2015. Also in 2016, 3.3B in long term debt, offset by nearly 2.8B in cash, equivalents and capital. All of this on top of 11.0B worth of content. Source, most recent NFLX 10-K, page 16. http://files.shareholder.com/downloads/NFLX/4903229026x0xS1628280-17-496/1065280/filing.pdf http://files.shareholder.com/downloads/NFLX/4903229026x0xS16...

verytrivial 9y ago

So, assuming Netflix goes belly up at some point, I am MUCH happier they spent $20B making shed-loads of new content (i.e. paying out to creative and production people) that will live on than e.g. putting it in a pile and burning it like the Facebook / Whatsapp $16B "valuation". That value just disappears IMHO.

jasonkostempski 9y ago

Im sure most of the $9 a month I used to spend went to paying for licensed content but I watched probably 80% original content. I left because of DRM. I don't know if it would be a money making venture for them but, for $5 a month, I would subscribe to a Netflix Original content only, DRM free service if they offered it. Seems like it'd be easy for them to do a trial run of such a thing.

gcp 9y ago
What's the exact part of the DRM that bothers you? Personally I hate the restrictions such as "4K only on Kaby Lake with Edge etc" and I downgraded my subscription because of it.
- jasonkostempski 9y ago
  All parts of DRM bother me equally.
aphexbr 9y ago
You won't get DRM free, because Netflix don't sell you the content, they rent it. Or, more specifically, they sell you access to the platform to stream the rented content. I'm all for DRM-free purchases, but you're never going to get DRM-free rentals.
- jasonkostempski 9y ago
  Their stuff, and everyone elses, is easily available for download, DRM free, without a fee of any kind. DRM has never stopped that. Netflix knows that. I have no doubt DRM is required for every contract they have with other studios, but they could show they're not fools by allowing me to stream their original content without having to allow closed, proprietary binaries to run on my machine to do it. I have no interest in maintaining terabytes of video and manually managing distribution to multiple device. I don't think many people would. I'd rather pay the $5 a month. I won't enable DRM in my browser, ever.

wweidendorf 9y ago

Very misleading article - per the company's latest 10-Q, they only have $4.8 billion in debt. On a net leverage basis, they are currently around 3.2x net debt / EBITDA which is down the fairway for most high yield public companies. The remainder of their "debt" as the article lays it out is in Streaming Content Obligations and is not debt as you and I would think about it. Yes, it is contractually committed; however, unlike debt, they likely can default on their obligations and the only recourse would be a lawsuit for either damages or specific performance. (There is also no interest payment - as interest expense on $15.7 billion would be significant relative to their current debt burden.) Compared to true debt instruments, which carry covenants that allow the debtholders to push the company into bankruptcy, the streaming content obligations very likely do not have any such ability to do so. (From what I can tell, the cross-default clauses in their debt instruments do not trigger in the event that they do not fulfill their streaming content obligations.)

monochromatic 9y ago
Do the streaming content obligations explicitly say that the "creditor" can't initiate bankrupt proceedings or something? This seems strange.
- justQuestion2 9y ago
  How are these obligation computed? 1. If I subscribe to Netflix for a year for 10$/month and pay in advance at the beginning of ther period, does this result in 120$ of streaming obligations? 2. Or do the record the costs needed to fulfill the order?

thinkMOAR 9y ago

If Musk can keep living on credit based on 'his company status', i am quite sure that netflix will be able too. Though god knows where that 20 billion debt in the article actually comes from...

erikpukinskis 9y ago
Tesla's line of credit isn't due to "status" it's due to past performance. They have consistently doubled sales and production every 18 months or so since they began selling cars, and have orders on the books showing at least as much growth for the next several years. What "status" do you think Tesla has that makes them a target for creditors? You think Deutsche Bank just thinks Elon Musk is cool and hip?
- thinkMOAR 9y ago
  Performance/status is more then just black numbers down at the end of the balance. The status of super popular by huge volumes of people. So in essence yes because he is so cool, hip, and also because he creates/thinks of things that appeal to the mass, and people cannot stop talking about it on birthday parties and events alike. disclaimer, i drive a 20 yo toyota and own nothing of tesla.

samfisher83 9y ago

You can look at their latest balance sheet and you can tell all their liabilities don't add up to 20 billion. Long Term debt is 4.3billion.

pgeorgep 9y ago

Netflix can do whatever they want. They are growing at such a crazy rate, they will Amazon their way to a profitable company (burn billions to make billions)

gumboshoes 9y ago

"$20B in debt" is not the same as "carrying $20 billion in debt." Those are very different business traits!

lifeisstillgood 9y ago

I have an odd thought - Netflix is going about its new commissioning process all wrong. lokking at Netflix from the POV of "innovators dilemma" they are the low end upstart coming to steal the studio / broadcasters lunch But having the broadcasters lunch on its lips it is now trying to copy the studios at their own game - creating high quality must watch content. I think that's the wrong game. One of my favourite discoveries on Netflix was "chaos on the bridge" where Shatner narrated a documentary on the first few years of Star Trek NG. It was fun, had almost zero cost apart from some talking heads and the researcher time. A similar one on Atari, and the rise of Compaq all made me think that documentaries would be the new magazines - something for everyone's interest and dirt cheap to make - and with not much skill will eat up 50 mins of my time as easily as a GoT episode Just wondering if they are not getting above themselves?