Netflix Will Lose Money for All of 2012 Essay Example | Topics and Well Written Essays - 750 words

Netflix Will Lose property for All of 2012 - Essay ExampleFortunately, Netflix was able to determine the main cause for their financial downfall. In a very costly move, the company had decided to expand its video streaming service into Ireland and the United Kingdom. disrespect the price of the endeavor, it is expected to be a success however, a large amount of United States subscribers moderate wadcelled their own services, significantly decreasing the amount of money that Netflix can play with to expand their services. During the regulative filing on November 21, 2011, Netflix extended their warning of losing money to encompass the entire 2012 fiscal year. As though needing to show proof of their financial difficulties, Netflix sh bes closed at 5.4% lower on November 22. During the same filing the revealed the ravage announcement, Netflix also announced their plans of raising an additional four hundred million dollars to help the company come forth of their financial hole. T o do this, Netflix is turning to investors. Netflix is currently selling almost three million sh ares at s planety dollars per share, which is six percent below the closing price on November 21. The offering was scheduled to close near on November 28. Further more, Netflix is also selling cardinal million dollars worth of convertible bonds to investment funds that are associated with Technology Cross everyplace Ventures, which is a fund that has been investing in Netflix for over ten years. The money raised from all of the aforementioned methods will provide the company with the money needed to invest in more content, though the need for secondary offerings are usually believed to be foreboding signs of further financial devastation. They can signal that expenditures have outpaced expectations and that a company needs to raise more cash. To dress matters worse for Netflix, which merely had roughly four million in cash at the end of the last quarter, is that they are confront t hreats brought on by rivals with a significantly larger amount of money. Film and television studios are demanding even more money for companies to make use of their valuable content, and rivals are coming out of the woodwork to make their bids. Among these rivals are big names such as Hulu and kiosk service Redbox, but other well-known(a) technology giants that are looking at creating video streaming include Amazon and Google. An analyst say earlier this year that Netflixs streaming content licensing will cost a total of two billion dollars in 2012, which is a significant rise from the one hundred and eighty million they were pay in 2010. In its filing on November 21, Netflix stated that it has payments of roughly four billion dollars due over the next few years to pay for content under their current contracts. Unfortunately, Netflix is losing many of these incredibly main(prenominal) licenses. Starz, a particularly large name in entertainment, has opted not to renew their cont ract with Netflix. By primaeval 2012, they plan to remove all of their movies and television shows from the Netflix service. This loss of content has customers up in arms, demanding why they are being expected to pay more for a service they are getting less of. Customers were already fuming due to Netflixs announcement in July to charge separate prices for DVDs-by-mail and streaming video, which would increase