Netflix, Inc. (NASDAQ: NFLX) is a flywheel. It keeps spinning faster and faster. The pricing and the access consumers have could cement Netflix as a long term streaming king much like Amazon.com, Inc. (NASDAQ: AMZN) is king of online retail with little to no serious competitors.
Netflix is currently valued at $50 billion though its efforts to reinvent TV from the bottom up could multiply that market cap. Its daring move is similar to what Amazon did for retail. Netflix is taking far-reaching steps towards dominating digital streaming on a global level.
Over the last few years, Netflix has enjoyed substantial and consistent growth and now claims about 70 million subscribers who pay approximately $8 to $10 million per month. Amazon similarly has huge movie and TV libraries that customers have access to once they subscribe to their services. Last year Netflix was rated as the best performing of the S&P 500 index. It climbed 125% over the last year.
Recently, Netflix CEO Reed Hastings announced that his company would be available to every country in the world except China. This would double its potential market. Most analysts had anticipated that Netflix would roll out globally though most never thought the move would be carried out in one go. Market access to 130 countries is a similar scope to what Amazon has.
Netflix is sparing no expense to cement its business lead in streaming. The company is also gathering large amounts of market data concerning their users and habits.
When Amazon was rolling out globally in the late 90’s and early 2000’s, it primarily invested in warehousing while Netflix is investing in new content. Ted Sarandos, head of content acquisition, stated that Netflix is all set to produce 600 hours worth of original programs in 2016.
As Netflix gets more data and more money, it will have the opportunity to bring in more customers with ever wider market access. Netflix currently charges around 14 cents per hour which is quite favorable to the consumer as cable is between 25 to 30 cents per hour.
