> Does it make sense, from an accounting point of view
Yes, that's the entire point of accounting. They use ASC 920 and 926 accounting standards, so that anyone familiar with GAAP can understand what they're looking at.
> Disney+ or Disney loses 90% of their value in the 1st year, so Disney's accounting will only be paying for "Turning Red" this year and next year.
Disney+ also amortizes, and expects 80% over four years on original content.
> Netflix has effectively "borrowed future money", from an accounting perspective
Except that's not the accounting perspective. Netflix spends most of its cash on content before it even airs - should they recognize those expenses against income before that content has even had a chance to start generating income? That's borrowing future revenues against current cash outlays.
That's why we have these standards, so that when combined with three-sheet accounting we can understand how the pieces come together.
> Yes, that's the entire point of accounting. They use ASC 920 and 926 accounting standards, so that anyone familiar with GAAP can understand what they're looking at.
Things like depreciation curves are not standardized. It may all be GAAP, but there's a huge difference in how Disney's Coco was depreciated vs how Netflix's Bright depreciated in their respective accounting books.
The question is whether the 18-month schedule for Coco makes more sense than the 5-year schedule of Netflix's Bright.
> Things like depreciation curves are not standardized
Nothing was depreciated, because we're dealing with intangible assets. And yes, depreciation and amortization schedules are absolutely standardized. I literally included TWO standards in my last response that Netflix & Disney+ use.
> huge difference in how Disney's Coco was depreciated vs how Netflix's Bright
Yes, because Coco was part of Disney and not Disney+.
> The question is whether the 18-month schedule for Coco makes more sense
Yes, it makes sense for a theatrical release. "Bright" and "Turning Red" were created for streaming, and it makes sense that their amortization schedules cover the years that this IP will be helping the companies generate revenues as those titles continue to be viewed by subscribers.
If you were to take all the views for "Bright" and aggregate it by year, I imagine the distribution from year 1 to 5 looks very similar to Netflix's amortization schedule. Funny that, almost like the SEC approved it or something.
Yes, that's the entire point of accounting. They use ASC 920 and 926 accounting standards, so that anyone familiar with GAAP can understand what they're looking at.
> Disney+ or Disney loses 90% of their value in the 1st year, so Disney's accounting will only be paying for "Turning Red" this year and next year.
Disney+ also amortizes, and expects 80% over four years on original content.
> Netflix has effectively "borrowed future money", from an accounting perspective
Except that's not the accounting perspective. Netflix spends most of its cash on content before it even airs - should they recognize those expenses against income before that content has even had a chance to start generating income? That's borrowing future revenues against current cash outlays.
That's why we have these standards, so that when combined with three-sheet accounting we can understand how the pieces come together.