There’s a long answer to the question: “how does Netflix make money?”And short. The short answer is they don’t. In fact, since 2011, Netflix has had no positive cash flow. So the more important question is, ” How does Netflix not make money?”Let’s back up and start with some basic information.

Netflix was founded in 1997 by reed Omstings and mark Rudolph as a service that allowed users to rent movies on DVD over the Internet and have them mailed to their doors. Now, 21 years later, Netflix is primarily a provider of online streaming content including TV shows, movies and documentaries.

The $ 141 billion company operates a subscription-based model and currently boasts more than 125 million members in more than 190 countries, watching more than 125 million hours of Netflix content per day. Along with 5.15 million added users in the last three months, the company announced 88% more original content on the site in just one year.

Netflix’s highest cash flow (or the amount of cash Netflix generates from its normal business operations minus what it spends on major projects).

With many users, and that many content options, Netflix accounted for 36.5% of all downstream Internet bandwidth during peak periods in North America in March. Overall, Netflix consumes more bandwidth than Youtube, Amazon and Hulu combined during peak periods according to a report put out by Sandvine, a canadian provider of bandwidth management systems.

The company does not sell advertising space on its website and it does not sell its user data like other major technology / media companies. Netflix’s main source of revenue is subscriptions. Monthly membership fees from three different plans – basic, standard and premium-is where all the money comes from.

So most of Netflix’s revenue comes from subscriptions, and they have more than 130 million subscribers, and the site alone can take about a third of all broadband in North America, how can they make money? The answer to this question is competition. Netflix isn’t the only company providing streaming TV and movie content online. It competes with other mass-market companies like Amazon, Hulu and HBO.

In 2019, Disney is set to pull all of its content from the Netflix site and create its streaming service following Disney’s acquisition of 21st Century Fox’s film and television assets. Even Apple has announced a move to entertainment and original content and has signed content creators including Oprah Winfrey and Steven Spielberg.

For Netflix, the best way to boost subscriptions and beat the competition is to produce Netflix exclusive content, and it should be good, too. Netflix has announced plans to spend up to $15.7 billion in 2018 on content this year on TV shows and movies to fend off rivals. The company is spending huge amounts of money on high-priced creators like Ryan Murphy-the “Glee” and “Pose” producer who signed a $ 300 million deal with Netflix and Shonda Rhimes, a prolific ABC producer and Creator of shows like “Scandal” and”grey’s Anatomy.” Netflix also paid Barack and Michelle Obama an undisclosed amount of money to produce shows and movies for the company.

To outgrow its competitors, competitors who typically have other sources of revenue aside from streaming services, Netflix has put a lot of money into original and exclusive content creation. All in all, the company is taking a gamble and borrowing more money than its making with the hopes of future growth. So, just how much money is Netflix not making? Let’s start with a basic fact: Netflix’s highest ever cash flow (or the amount of cash Netflix generates from its normal business operations minus what it spends on large projects) is $279 million. That was in 2009 before the company expanded globally. By 2012, Netflix dipped into a negative cash flow that has only gotten worse. In 2017, the cash flow was around $-2.01 billion, and by 2018, it’s expected to hit $-2.79 billion.