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> A decade or so later and we've got Netflix, which can make the technology work. Now we just need to wait one more decade and someone will figure out the "make
by MegaButts 7y ago
> A decade or so later and we've got Netflix, which can make the technology work. Now we just need to wait one more decade and someone will figure out the "make money" bit.
I hear people say Netflix isn't profitable all the time, and I believed them until one day I decided to look it up. They are very successful judging by their net income.
https://www.statista.com/statistics/273884/netflixs-quarterly-net-income/ https://www.statista.com/statistics/273884/netflixs-quarterl...
I hear people say they're losing money so often though that I wonder if I'm misunderstanding something.
- laurencerowe 7y agoNetflix's switch from licensing to producing original content has meant higher capital expenditure. If you were to account for this in a single year as an operational expense rather than deprecating it over a number of years it might look like Netflix was losing money.
- s_Hogg 7y agoI think that argument is advanced by a fair few companies to justify losing money indefinitely. A tweet (which I now can't find), once said that "the ability to sustain losses indefinitely is the 'moat' of this economic cycle"
- inflatableDodo 7y agoSounds like the Hollywood accounting methods where Star Wars is yet to turn a profit.
- MegaButts 7y agoI still don't understand. The last time they lost money was over 6 years ago...if they make money every quarter how can you say they're losing money? Can you give me some hypotheticals with numbers to help me understand?
- laurencerowe 7y agoThis is because Netflix account for the spending over several years even though on a cash flow basis spending exceeded income some of those years.
- MegaButts 7y agoSo you're saying they might lose money some quarters...but then wouldn't they make that much more other quarters? Ultimately their bank account is growing, and it's not like their war chest is so small they can't ride out some oscillations.
- laurencerowe 7y agoNo I’m saying that they are spending more per year than they are making but the content they create with that spending has value beyond the year it was made so though they are cash flow negative they are still profitable.
- MegaButts 7y agoSo is the future value of that content reflected in the net income I linked? That explains my misunderstanding. I'd ask how they calculate that number but I guess I should just dig into the earnings reports myself.