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

Netflix Will Lose Money for All of 2012 - Essay Example Fortunately, 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. Despite the price of the endeavor, it is expected to be a success; however, a large amount of United States subscribers have cancelled their own services, significantly decreasing the amount of money that Netflix can play with to expand their services. During the regulatory 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 shares closed at 5.4% lower on November 22. During the same filing the revealed the devastating announcement, Netflix also announced their plans of raising an additional four hundred million dollars to help the company out of their financial hole. To do this, Netflix is turning to investors. Netflix is currently selling almost three million shares at seventy dollars per share, which is six percent below the closing price on November 21. The offering was scheduled to close approximately on November 28. Furthermore, Netflix is also selling two million dollars worth of convertible bonds to investment funds that are associated with Technology Crossover 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. â€Å"They can signal that expenditures have outpaced expectations and that a company needs to raise more cash.† To make matters worse for Netflix, which only had roughly four million in cash at the end of the last quarter, is that they are facing threats 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 technology giants that are looking at creating video streaming include Amazon and Google. An analyst stated earlier this year that Netflix’s 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 paying 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 important licenses. Starz, a particularly large name in entertainment, has opted not to renew their contract with Netflix. By early 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 Netflix’s announcement in July to charge separate prices for DVDs-by-mail and streaming video, which would increase

UK retail sector during financial crisis Dissertation

UK retail sector during financial crisis - Dissertation Example The data are used in an extensive review of literature and as comprehensive resources that informed the analysis and the discussion of the study. While the findings are not definitive, this study's investigation was able to provide suggestive details supporting the positive relationship between the UK protectionist measures and the performance or the survival of the retail sector after the crisis struck British shores. The impact of the financial crisis especially on the future developments and trends in the UK retail sector was also identified. This was based on the expected response on the part of the policy networks and the industry decision makers. Several problems were also cited both on the part of the government and its policies; and, on the side of the retail industry. The study was able to propose possible solutions and modifications to existing policy attitudes towards the retail sector based on t he lessons learned from the financial crisis experience. INTRODUCTION The ret ail sector is an important component of the United Kingdom’s economy. A prominent part of the industry is the British Petroleum, ranked second in the European continent and the biggest industrial incorporation in the UK. The sector also include the vibrant mechanical engineering and manufacturing sectors, which are both important in the British export output (Hiles, 2010, p.39-46) Then, there is the financial institutions such as investment firms and the banking institutions, which serves one-tent of the global financial requirements. The aggregate turnover of the entire retail sector accounts for a significant portion of the country’s gross domestic product (GDP). The sector ranks fourth in the global trade market. It is a leading player in the European Union and that it is one of the largest industries in the whole of Britain. It is not surprising, hence, when the British government provides it with special protective measures because any instability can result to a crippling effect to the entire economy (HM Treasury, 2009, p.23-25). This is particularly highlighted during the series of financial crises that hit the world in the past decade. For instance, when the 2008 financial crisis that originated in America spilled over across the globe, the British consumption experienced some disturbance. The retail sector was hit as the economy immediately contracted by 0.5 percent (UK Parliament, 2009, p.139). The consumer attitude and purchase behavior showed signs of dampening, which can affect the sector in the next few years or so. In a recent survey by Data Monitor, it was found that 90 percent of the British consumers believe that the country is in recession and that 47 percent reported a worsening of personal financial situation (Market Watch, 2009, p.73). The report found that majority of the consumers is in the process of making changes to their lives and purchasing behavior and that previous purchasing patterns can only be maintained