Netflix made a loss of $55 million on a very bad investment when they sponsored director Carl Erik Rinsch’s sci-fi series Conquest and it got shut down due to poor management. The streaming giant paid Rinsch $44 million at different times but there was hardly any progress to show for it. When he asked for another $11 million in 2020, Netflix sent the money – only to find out later that Rinsch had used it to buy stocks, Dogecoin, luxury cars and a really nice watch. At first, Rinsch appeared to be a good director, he had once worked with Ridley Scott and had won an award for his short film The Gift. However, his only major film, 47 Ronin, was a failure in both critics and at the box office. Nevertheless, Netflix and its competitors like Amazon and Hulu had reports of unprofessional conduct, yet Netflix outbid all of them for Conquest and gave Rinsch the full control of creativity. When the deadlines were missed and the executives of Netflix started to have doubts about the investment, the Netflix executives began to have second thought. By 2021, the company shut its door, asking for the $55 million it invested to return to the company. However, by the time Conquest shut down, Rinsch had already burned through the money. He was recently arrested on charges of fraud and money laundering. This decision of Netflix was also affected by some cognitive biases. The halo effect made Rinsch to appear to be more competent than he actually was because of his background. The fear of missing out (FOMO) made Netflix to compete for the project aggressively because of the competition. The sunk cost fallacy made them to continue providing funds to a project that was clearly failing. This is because, the costly blunder shows that when one is making investments, they should not only rely on what they see but on the real results. Netflix got the lesson the hard way, but other business people can prevent the same mistakes by looking at the numbers not the noise.
Subscribe to Updates
Get the latest creative news from FooBar about art, design and business.