Netflix’s Strategy Is Growth, So It Can’t Have Growing Pains
It has to have rapid expansion to distract from a big cash bonfire and looming IOUs.
Spend now and pay later.
Photographer: Bloomberg
Netflix Inc. must grow. It has no choice. Sharks must keep swimming, and Netflix needs to keep signing up as many newcomers as it can. This is the path the company has chosen. Netflix’s blueprint is to spend money it doesn’t have today to land alluring programming and sign up as many customers as possible — and worry about the bill later.
It’s a rational strategy to take advantage of a unique moment when competition is relatively subpar, viewing of streaming video is exploding, borrowing is cheap and investors are happy to let Netflix be financially irrational. The idea is Netflix can gather up customers now and squeeze them for more money and profits once they’re happy long-term customers and conditions are right.