Following a disastrous quarter that saw a drop in domestic subscribers for the first time in nearly a decade, Netflix isn’t hitting the brakes on its big-spending ways, and is on track to spend half a billion dollars on just three movies.
The Wall Street Journal reported Monday that Netflix is investing more than $520 million to make three big-budget films, including Martin Scorsese’s The Irishman. None of the new titles will receive the kind of wide theatrical release that would allow a traditional movie to recoup its costs.
Citing anonymous sources, the Journal estimated The Irishman will cost Netflix at least $173 million, with some putting the price tag at more than $200 million. The amount is significantly higher than previously reported estimates, which had pegged the movie at over $100 million.
The enormous budget is more typical of Marvel superhero blockbusters, not adult-oriented dramas. But Scorsese is reported to be using extensive visual effects technology to de-age actors including Robert De Niro, who plays union hitman Frank Sheeran.
The Irishman is expected to have a limited theatrical release in November followed shortly by a debut on Netflix’s global streaming platform.
Netflix is also spending up to $200 million on a new action movie starring Dwayne “The Rock” Johnson, and $150 million on a Michael Bay movie, according to the Journal. Overall, the streamer is expected to spend $15 billion on content this year.
Netflix has long relied on debt to finance its ambitious projects, since revenue from its subscriber base doesn’t come close to covering the costs of its movie and TV shows. The company has repeatedly said that favorable interest rates make debt financing an attractive option as it pursues high-profile titles, which it hopes will generate more subscribers.
As a result, Netflix is carrying billions in long-term and short-term debt. Investors have largely overlooked the company’s ballooning debt load, preferring to focus on its subscriber growth as an indicator of future profitability.
Earlier this month, Netflix reported that it lost approximately 130,000 U.S. subscribers during the second quarter. It’s the first time that the company has seen its domestic subscriber base fall since 2011. Shares of the company plummeted on the announcement by more than 10 percent.