When a business has grown successfully over the years, the only option is to expand. In a statement to the press, according to variety.com, “Netflix formally announced it is seeking to offer $400 million aggregate principal amount of 10-year-senior notes due 2024…use for acquiring original content and expanding into Europe.” These plans will be effective on February 19, 2015. Is their new abundant budget a wise choice, meant to continuously generate more income and success? Instead, will they soon file for bankruptcy? Millions of people would mourn for the loss of Netflix and their easy to use system.
Already, Netflix have been huge spenders developing their own original productions. On thewire.com, they stated that the first two seasons of Emmy nominated series House of Cards had a budget of $100 million. This is similar to the budget of a worldwide release movie! The series is continuing with it’s third season, releasing on February 27.
Plus, television shows are not their only type of production. The New York Times reported that comedian Adam Sandler, along with his company Happy Madison, have planned to develop four films with Netflix. Sandler himself is set to produce and star in them as well. Believe it or not, Netflix will match the current budget Sandler usually has with his blockbuster films (Blended, Grown Ups 1 &2), ranging from $40 million to $80 million. Considering Netflix’s hit series being on audiences’ good side, Sandler must not disappoint. No one wants a repeat of Don’t Mess with the Zohan, or even worse, Jack and Jill.
The expenses above are just a taste of what Netflix has spent thus far. They offer a mailing rental service of physical copies of DVDs and HD formats and the number of DVD/HD rentals vary, depending on the plan one purchases. A juxtaposed shocker is that the subscription plans, including unlimited online content of movies, documentaries, and shows, are inexpensive: Basic – $7.99, Standard – $8.99, and Premium – $11.99. This is like a generous offering of ice cream and they gently put the cherry on top by allowing you the option to cancel your subscription at anytime. Here’s the chocolate syrup swirling all over your sundae – you can stream Netflix video content through laptops, tablets, cell phones, computers, gaming systems, and Smart TVs.
Netflix subscribers gain a sweet bundle for a low price, although, is Netflix giving themselves the short end of the stick? Thewire.com stated that Netflix currently has 33.3 million subscribers and also they calculated if Netflix gained 520,834 new subscribers to join for two years, they will only just make ends meet. Possibly their expansion to Europe and other countries would do the job for them. As long as they don’t repeat a previous mistake, the company should thrive. Back in 2011 they bumped up the price of the service and attempted to split the streaming and disc services apart. Many customers became angry and cancelled their subscriptions because of that. But what if Netflix is forced to increase their prices since they will have increased their budget and reach? Will customers accept a price increase now that Netflix offers more content than before? Only time and good strategic business decisions will tell if this is a colossal mistake or a growing success. Netflix users, cross your fingers and hope Netflix will still exist!
