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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&fstyp

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...
- vizzah 9y ago
  They won't tell how many of those are free trial users who keep rotating in assumingly very high numbers..
abhi3 9y ago
> Whenever I read about a software company needing that kind of money though, I often wonder why Netflix is a software company just as much as Tesla is a software company. You realise Netflix pays billions each year in licensing fees and production costs for originals?
- usrusr 9y ago
  Also, whenever Netflix spends money to produce content they are creating IP assets that are much closer to fungibility than any IP most software companies ever create. A bank will be much more willing to consider the rights to the House of Cards remake as a collateral than your awesome build configurations, an in-house web framework or even the entirety of the Oracle RDBMS sources.
elmar 9y ago
> 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 very diferent business models Netflix is probably spending Billions on creating original content.
bjpbakker 9y ago
> I wonder where the $20B figure came from, Google finance says that they only have about $3 billion in debt The numbers are from Netflix's QE reports [1]. I don't know exactly where Google Finance gets the information, but IMO it's always better to get the data close to the source :) [1] - https://ir.netflix.com/results.cfm https://ir.netflix.com/results.cfm
awkwarddaturtle 9y ago
You are looking at their quarterly income statement and their quarterly operating expense. That's not "debt". If you want to see their debt, look at the balance sheet and see "Total Liabilities".
princekolt 9y ago
> 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. I think if you ask most employed software engineers if they'd quit their jobs because of an opportunity to develop their own ideas, you'd hear a resounding "yes". Considering most developers I know are crafty people who don't care about "career ranks", if big companies did this they'd just hurt themselves by giving developers the funds to pursue their ideas in the future.

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...
vizzah 9y ago
They won't tell how many of those are free trial users who keep rotating in assumingly very high numbers..

abhi3 9y ago

> Whenever I read about a software company needing that kind of money though, I often wonder why Netflix is a software company just as much as Tesla is a software company. You realise Netflix pays billions each year in licensing fees and production costs for originals?

usrusr 9y ago
Also, whenever Netflix spends money to produce content they are creating IP assets that are much closer to fungibility than any IP most software companies ever create. A bank will be much more willing to consider the rights to the House of Cards remake as a collateral than your awesome build configurations, an in-house web framework or even the entirety of the Oracle RDBMS sources.

elmar 9y ago

> 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 very diferent business models Netflix is probably spending Billions on creating original content.

bjpbakker 9y ago

> I wonder where the $20B figure came from, Google finance says that they only have about $3 billion in debt The numbers are from Netflix's QE reports [1]. I don't know exactly where Google Finance gets the information, but IMO it's always better to get the data close to the source :) [1] - https://ir.netflix.com/results.cfm https://ir.netflix.com/results.cfm

awkwarddaturtle 9y ago

You are looking at their quarterly income statement and their quarterly operating expense. That's not "debt". If you want to see their debt, look at the balance sheet and see "Total Liabilities".

princekolt 9y ago

> 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. I think if you ask most employed software engineers if they'd quit their jobs because of an opportunity to develop their own ideas, you'd hear a resounding "yes". Considering most developers I know are crafty people who don't care about "career ranks", if big companies did this they'd just hurt themselves by giving developers the funds to pursue their ideas in the future.