When a manufacturing company buys a machine that will last them many years, the cost of that machine does not constitute a cost to the company in the year when it was purchased. Rather, the machine is included as an asset on the balance sheet, which diminishes in value over time. While value is subjective and the value of assets on a balance sheet often deviate from the market value of that asset, the principle of separating costs from investments is important.

When Netflix spends $200 million on a production of a particular content (i.e., a movie or a series), discuss how you would think about the value of that content one year, five years and 20 years from now? 

While the book value (i.e., value on the balance sheet) could be interesting, focus your discussions about how you, as strategists, would think about the change of value of content over time. 

Also, discuss how the value of a movie changes for you (as a viewer) after you have seen it and compare this to how the value of a song (music) changes after you have listened to it.

 What does this mean for Netflix? 

Answer rating: 100% (QA)

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