Netflix (NFLX), the very popular video streaming service, is leaving no link in the value chain untouched to give its users a very good service. At the same time the company has been looking at new channels of profitability and growth.
Subscriber growth has primarily been through geographic expansions into new territories and acquiring new subscribers in current geographies. In addition, the fact that Netflix has launched its services across multiple device platforms has played a significant role in the user base of the company taking a steep upward curve, increasing more than 23% over the last six months. This can also be attributed to the fact that Netflix can target customers with relevant content as it knows the pulse of the market. The company can track what exactly customers are viewing which isn’t possible for the traditional television channel providers. Another milestone in the company’s growth story occurred last month, when the number of Netflix paying subscribers in the UK touched $1.5 million, 18 months since its UK launch. Looks like ‘cable TV’ operators are not going to love the pace at which Netflix is growing. They must be looking at alternative businesses, to say the least.
Another positive step from the Netflix management has been the decision to move into content production. If you are wondering why that is a positive, we are here to answer exactly that. Well before we answer that let’s look into what has come from ‘Netflix-The show producer.’ The company’s first television show titled ‘House of Cards’ is one of the nominations for this year’s best drama at next month’s EMMY awards. And if you are trying to remember whether or not that is a television series, then we understand that quizzical look on your face as this is a show exclusive on Netflix. Just to prove that this isn’t a one-off hit from Netflix as a show producer, we would like to highlight the fact that another of Netflix’s production entitled ‘Orange is the new Black’, has been a smash hit in the United States. So what does this mean for the profitability of Netflix? The in-house production will offset Netflix’s content acquisition costs, which make up more than 70% of revenues, and will give the company a profitability boost in the years ahead. Netflix stock is one stock we will keep our eyes on as the company is as exciting as it seems, and it is no surprise that Netflix stock has gained a whopping 200% in the year-to-date.
Netflix stock price
Source: Netflix stock chart by Amigobulls
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