When it comes to streaming content, Netflix Inc. (NFLX) is by far the largest player thanks to its 104 million subscribers, a 25% increase from just a year ago. While shares are up more than 40% so far in 2017, there are growing concerns among some investors about the company’s debt load, which currently stands at $20.54 billion. (See more: Netflix Is a Buy as it Reaches ‘Escape Velocity’.)

The short- and long-term debt enables Netflix to pour millions if not billions of dollars into producing and acquiring original content as it aims to increase its subscriber growth even more and to keep rivals such as Hulu and Amazon.com Inc. (AMZN) at bay. It has been a strategy that has been paying off given its original programs have won 91 Emmy Award nominations this year alone, behind only HBO.   

Aiming for 50% Original Content

But there is also risk to taking on that level of debt if Netflix isn’t able to continue to produce hit after hit as it has been doing. In fact, some industry players told the Los Angeles Times there could be a Netflix bubble that will burst big time if it produces content that fails to resonate. “Nobody is ever the dominant player forever,” Mike Vorhaus, president of Magid Advisors, a media and digital video consultancy, told the Times. “I think they're going to need some luck in not drowning in debt in the ultimate slowdown of growth.” (See also: Three Original Shows That Boosted Netflix's Top Line In 2016.)

Despite the concerns by some investors and industry watchers, Netflix isn’t likely to throw in the towel on spending on original content given it has a goal of having 50% of the shows and movies on its streaming platform self-produced. In fact, in a recent CNBC interview, Chief Executive Reed Hastings applauded a move by the company to cancel the hip-hop drama “The Get Down” after reportedly paying $120 million for the first season. Hastings argued Netflix should have even more cancellations because it shows the content team is taking risks. As for the capital outlays needed to bankroll new content, Hasting said that the payout from the upfront investment comes over many years. “The irony is the faster that we grow and the faster we grow the owned originals, the more drawn on free cash flow that we'll be,” Hastings said on a recent investor call, reported the Times.  

In its latest balance sheet, Netflix said the worth of its current content assets—or the content that will earn revenue for the company within the next one year—increased by 28.2% between 2015 and 2016 to $3.7 billion. At the same time, its non-current content assets—or the content that the company expects to monetize in the long term—grew 68.6% to $7.2 billion.