Netflix has poured billions of dollars into original content and the company is not slowing down. Netflix has said that it’s raising $2 billion through a bond offering and that the money will be used for content production, acquisition, and development in addition to being used for “general corporate purposes.”
The company’s annual spending on original content has surged to $12 billion. That’s much more than what its competitors are spending. Netflix added almost 700 hours of original programming to its library in the third quarter of this year. That’s a 50 percent increase from the second quarter.
Netflix will be selling $2 billion in these debt instruments to qualified institutional buyers. The bonds will mostly be denominated in euros and U.S. dollars. It’s going to set the interest rate and maturity of these bonds later.
It obviously needs more money to continue investing in quality original content. Netflix is aiming to have original content make up the bulk of its content library even though it started off largely by licensing content from other companies.
The company’s original content strategy has been a key driver of its subscriber growth. The latest earnings report showed that it beat market estimates on new subscribers yet the market remains concerned about the company’s strategy of spending extensively on original content and taking losses even while its subscriber numbers grow.
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