Netflix (NASDAQ:NFLX) bears often point to the company's more than $5 billion in streaming content liabilities as a "ticking time bomb" that will eventually pose a severe threat to the company's health. Competitors such as Amazon.com (NASDAQ:AMZN) are entering the streaming video market, and the resulting bidding wars have driven up the price of content.
Furthermore, Netflix has recently been growing its library of original content, to differentiate itself from other streaming video services. For example, after Netflix lost the rights to a variety of children's shows from Viacom (NASDAQ:VIAB), it struck back by signing a deal for several original children's series from DreamWorks Animation (NASDAQ:DWA). However, these original series tend to be even more expensive than the content they replace.
The Motley Fool's consumer-goods bureau chief, Isaac Pino, recently sat down with Fool contributor Adam Levine-Weinberg to discuss Netflix's streaming content liabilities and whether they pose a threat to the company. In the following video, Adam explains why Netflix's content liabilities are so high, and what investors should look for going forward.
Adam Levine-Weinberg is short shares of Netflix and Amazon.com. Isaac Pino, CPA, has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, DreamWorks Animation, and Netflix and owns shares of Amazon.com and Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.