Why does everyone have an obsession with “cheap money”? You still need to pay a loan back, can reduced interest on a loan really prop up a company up? I feel like that vastly overstates the impact of interest costs on business’s bottom lines
"cheap money" lets you buy users. Netflix "allowed" people not paying the bill to use netflix accounts of those who did, Amazon sold devices at cost to get market share, uber et al hemorrhaged money to become ubiquitous as "taxi", and so on.
When money isn't cheap anymore, and you have to start showing a profit to get more money, the screws turn and users get squeezed. Merely showing a profit doesn't mean anything if you can't afford to do R&D without funding. Or, for a manufacturing perspective, your factory turns a profit, but you need to borrow money to buy a million dollar machine. The more it costs to borrow that money, the worse it gets for your customers - either because you use the older machines and make inferior product, or you have to raise your prices so the loan doesn't eat in to your profits as much.
Netflix for example has a lot of costs — servers, payroll, content creation, licensing, etc.
Interest is one cost, but hardly the whole picture of them. How exactly does Netflix’s interest costs going up mean their business model fails? Does it mean they must charge $10.50 instead of $10 per user?
"money is expensive" means that, an investor, given the choice between giving netflix money to buy more customers and putting that into a bond or something starts to lean away from "give this company cheap money in the hope valuation goes up" and towards less "throw money at it and see if that works" investments.
It's not the interest, it's getting the money at all. Money was cheap, so netflix got lots of money, they put blockbuster and hollywood video and all the other companies out of business (mostly) with a great selection of DVDs and whatnot, then they got sweetheart deals from all the studios and production companies who couldn't imagine competing on the bandwidth costs alone; these deals, once again, greased by investor money. Once the major studios started their own streaming services, netflix was throwing investor money at consumer eyeballs with their whole "sharing is caring" model, where you're aunt's ex-husband's golf buddy could use your account credentials.
Now the free money has dried up, and investors want, you know, their investments back. Queue netflix raising prices, disallowing sharing accounts (and charging more for multi-screens); couple that with losing a huge portion of their library to studio streaming services, and suddenly paying adam sandler 100mm for a movie every year or two looks like a bad investment.
