Comment on Pixar will undergo significant layoffs in 2024.
xyzzy@lemm.ee 9 months ago
Streaming is a bad business model. It’s all a shell game because it doesn’t work on its own. They’re all afraid to not have a streaming service because they don’t want to one service to emerge as the sole winner and dictate licensing terms to them.
It’s like the prisoner’s dilemma: the best business decision would be to stick with direct sales of physical media and digital downloads (which once upon a time made studios a lot of money), but they’re all forced through competition to choose streaming, which means they all lose money hand over first.
Most people don’t know that Netflix funded a lot of its original programming by taking on a lot of debt. The company currently has over $11 billion in outstanding debt, most of which comes due in 4 years.
Disney is buoyed by its parks and linear programming (network and cable TV), but the latter is constantly eroding.
Paramount is the same story, but without the parks.
Amazon of course has its retail shopping ads (sponsored products) and AWS. Prime Video as an “investment” is a drop in the bucket. And of course they recently raised prices and leaned more heavily into streaming ads to try to claw back losses.
And when faced with the choice of protecting this money-burning business or laying off workers, cutting costs, and so on, studios repeatedly choose the latter. No other option than protect the prestige business that so many executives have tied their reputation to…
snooggums@kbin.social 9 months ago
While I did not know that about Netflix, taking on debt to keep up with business needs is how the vast majority of businesses grow so it shouldn't be a surprise.
xyzzy@lemm.ee 9 months ago
I know, but the size of new debt (relative to their revenues at the time) surprised industry observers back in the day. There were lots of articles about it.
The company declared positive cash flow in 2021 ($5.12 B) for the first time since 2011, and then earnings dropped in 2022 to ($4.49 B). Subscriber numbers continue to creep up relatively slowly. The debt is due in four years. While I think Netflix as a business is probably in the best shape relative to its peers, I think there’s a chance that they may need to issue new stock around that time frame. That would be a very bad signal to Wall Street. It’ll be very interesting to see where they and the rest of the industry are at that time.