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Netflix is about to be $3 billion in debt in order to make more original series, films

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But it’s going to be okay

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Netflix is already $2.37 billion in debt, but the company announced today in a press release that it was raising another $800 million through a new debt offering in order for the streaming service to create more original content.

Once the funds are raised, Netflix’s total debt will be more than $3 billion, but that shouldn’t be too alarming considering the companies plan for rapid growth. Netflix’s CEO Ted Sarandos previously said that the company was going to spend $6 billion on creating more original series and films, with a portion of that number being spent on acquiring other content and signing more exclusive deals.

Sarandos added that the company wants to move to having about 50 percent of its catalog being original content, and while that may seem risky, new statistics show that users are interested in the series and films Netflix is creating. Yesterday, AllFlicks released a study showing that ratings for Netflix original series and films are on average 11 percent higher than other titles in the streaming service’s library.

Netflix has said before that its increase in spending is all in an attempt to broaden its library, but according to recent reports, Netflix’s library has actually shrunk by 50 percent in the past four years. Netflix has lost the distribution rights to certain films and series as the company cuts the amount of money its spending on third-party content. Netflix may be spending $6 billion on creating more original content to make its library an even 50-50, but that library will inevitably be smaller than what long time subscribers are used to.

With that being said, Netflix isn’t looking to get rid of third-party content entirely. Last month, Netflix became the only pay-for-TV service in the United States to carry Disney’s theatrical releases once they’re out of theater. That includes all of the studios and companies that Disney has acquired over the years, too, like Pixar, Marvel and Lucasfilm. The pay for one deal, which is essentially a deal that lasts for years, will ensure that other networks like Starz and HBO, couldn’t stream or play any of the studio’s theatrical releases from 2016.

Even with the $3 billion of debt Netflix is about to take on, the company is still the leading streaming service globally and in the company’s third quarter, surpassed $2 billion in global streaming revenue. That’s a 36 percent increase year-over-year.

One of the biggest questions is what this drive for more original content means for other networks. At the television critics association press conference this past summer, FX president John Landgraf called out Netflix for its operations, arguing that it woud be “particularly bad if anyone in one company ... were able to seize a 40 or 50 or 60 percent market share in storytelling.”

At the same press tour, Sarandos said that it was subscriber growth, not ratings, that drove Netflix’s business. He added that he believed having more original and exclusive content would help drive the service’s growth. According to the company’s quarterly reports, Netflix is growing at a slower pace than it would have liked, and part of the $6 billion investment is to try and speed up its growth in membership.

Netflix is currently in talks with investors about the $800 million debt offering and no official deal has been made at this time.