Netflix (NASDAQ:NFLX) has a big challenge ahead of it. When Nov. 12 rolls around, Disney (NYSE:DIS) will launch Disney+, the most qualified "Netflix killer" the streaming video space has ever seen. Disney is building its new streaming brand on its established media properties, and Netflix is staring down the prospect of facing off against Star Wars and Marvel Studios armed with little more than the promise of future seasons of Stranger Things.

Netflix's content library will be larger than Disney+'s, but Netflix is undeniably short of big-time franchises. Netflix is clearly feeling the heat, and the company is responding by making major investments in content and other areas -- fueled by some big-time debt.

Coins fall through a businessman's hands.

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The name's bonds -- junk bonds

Netflix is raising $2 billion by selling junk-rated bonds. It hasn't said what the maturity date for the bonds will be. The goal is to raise money for all of the things Netflix wants to get moving on as Disney+ looms: content development, production, and acquisition. It's not clear exactly what proportion will be allocated to each of those various content-related goals.

It's abundantly clear that the timing here is no accident. Netflix might not have the deep pockets that other tech companies do -- when Apple decided to drop a billion dollars on original content and later re-upped for billions more, it just had to cut the proverbial checks -- but Netflix is intent on spending with the best of them.

It's also important to note that Netflix is adding these fresh billions to a content budget that is already measured in billions annually. Netflix spent more than $12 billion on content in 2018, though that figure includes licensing deals for outside content in addition to the originals.

The streaming wars are content wars

The choice to take out debt to fund content production speaks to the importance of Netflix's in-house content production to its future as a streaming giant. Netflix has been making original content for years, but it still relies on a lot of licensed content. Disney+, meanwhile, is starting with the advantage of more than a hundred years' worth of Disney-owned content.

Disney+ will also be home to new original series, including ones that make use of Disney's valuable IP (intellectual property) -- The Mandalorian, for instance, will be based on the Star Wars universe. But the big appeal of Disney+, at least as of this writing, is the promise that it will be the "forever home" of every Star Wars movie, every Marvel Studios movie, every Pixar movie, and every animated Disney classic. Disney has an arsenal of content ready to go, and Netflix's few years' worth of originals don't measure up.

Like Apple -- and unlike the media companies creating their own services, which include Comcast, NBCUniversal, and AT&T's WarnerMedia -- Netflix needs to rely on investing big bucks in original content that will, it hopes, be the next Stranger Things or something like rival HBO's Game of Thrones. This sort of content would make the service popular for brand-new hits (despite its a relative lack of established classics).

Of course, some amount of this funding is apparently earmarked for acquisitions. That could be the most interesting variable in this whole equation: Can Netflix land classic IP that helps it stand up to Star Wars, Marvel Studios, and the rest of Disney's nostalgia-laden fan favorites? Netflix has built originals on IP older than the company itself before, but Jim Henson's The Dark Crystal is no Star Wars. Maybe a couple of billion is what it takes to acquire some more Disney-like franchises.

An uncertain moment for Netflix

Netflix has been the king of streaming since it invented this whole business space in 2007. But despite this advantage, Netflix is not acting like an established streaming service -- because, in some sense, it suddenly isn't. The landscape has shifted dramatically, and Netflix finds itself with relatively little IP capable of keeping fans loyal. Without licensed content from Disney, NBCUniversal, and others, Netflix is -- in some ways -- starting over with streaming content.

Absent a time machine, acquisitions are the only way for Netflix to get IP as long-tenured and as popular as the content Disney+ will have. Meanwhile, Netflix needs to follow up Stranger Things with another hit before Disney+'s own originals become the flavor of the month. Netflix may be the king of streaming, but it will have to play its hand carefully if it wants to stay on the throne.