Netflix is going to be $3 billion in debt in order to make more original series and feature films.
Netflix is currently $2.37 billion in debt, but the company announced in a press release that they are raising another $800 million through a new debt offering contract in order to increase the amount of original content shared on the streaming platform.
Once the funds are raised, Netflix’s total debt will be more than $3 billion. But, that should not be too alarming considering how rapidly Netflix has grown over the last five years.
Netflix’s CEO Ted Sarandos previously said that the company was going to spend $6 billion on creating more original films and series, with a portion of that number being spent on acquiring other content and signing more exclusive deals.
Sarandos argued that the company wants to move to having about 50 percent of its collection being original content, and while that may seem like a risky investment, new statistics show that Netflix users are far more interested in the original series and films Netflix is creating.
Yesterday, AllFlicks released a study showing that ratings for Netflix original series and films are on average 11 percent higher than other titles in the streaming service’s library.
It’s important to point out that while Netflix is increasing the amount of money they are spending on new and original content, Netflix’s library has actually shrunk by 50 percent in the past four years. Netflix has lost the distribution rights to certain feature films and TV series as the company cuts the amount of money its spending on third-party content.
Netflix may be spending $6 billion on creating original content to make its library an even 50 percent, but that library will eventually be a lot smaller than what long time subscribers are used to.
With that being said, Netflix’s move to create more original content means more job opportunities for aspiring actors. Netflix’s Stranger Things cast several relatively unknown actors and now they are the biggest names in Hollywood. In addition, Netflix has productions filming nearly across the world, allowing for actors in rural areas to audition for acting jobs that were once unavailable to them.
One of the biggest questions is what this drive for more original content means for other networks. At the television critics association press conference this past summer, FX president John Landgraf argued that “particularly bad if anyone in one company … were able to seize a 40 or 50 or 60 percent market share in storytelling.”
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