Netflix is already the world’s largest streaming service, but the company may be looking at vast growth over the next ten years.
According to one of Wall Street’s top analysts, Brean Capital’s Alan Gould, Netflix might be able to grow its subscriber base to 250 million in a decade!
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“We believe NFLX has created an unstoppable lead in the internet TV business and is positioned to dominate the business long term,” Gould wrote on Monday in a note to clients, according to CNBC.
“It is on a path to become the largest spender on entertainment content creating a content moat and amortizing it over a global direct-to-consumer audience making it the low cost producer,” Gould said.
Gould is absolutely correct about Netflix spending a fortune on original content. It was recently reported in the company’s Q3 earnings that the streaming service company plans on investing $6 billion on content in 2017.
During the Television Critics Association’s press tour earlier this year, Netflix’s chief content officer Ted Sarandos explained why the company will be spending so much on new shows and movies.
“We don’t think there’s too much TV,” Sarandos said. “And if there is too much TV, someone else is going to have to slow down, because we have big plans for 2016 and beyond.”
“We are running a global network,” Sarandos said, “one that is not easily comparable either in business or cultural terms … We’re not courting advertisers, because we’re not targeting a single demographic.”
While $6 billion may be a crazy high amount, there are some financial benefits that the company has in comparison to regular TV networks. Netflix does not have to pay syndication costs, so all of the negotiating is done on the front end.
For example, iconic sitcom Friends still reels in about $1 billion every year in syndication revenue for Warner Bros, even though the series concluded 12 years ago. With the main six actors (Matthew Perry, Jennifer Aniston, Courteney Cox, Lisa Kudrow, Matt LeBlanc, and David Schwimmer) all receiving 2% of the income, that translates to WB shelling out $20 million a year to the actors. Netflix doesn’t have to deal with any of that, so they can afford to invest heavily in new content.
Also, be sure to check out what movies/TV shows are coming to Netflix in December, as well as the ones that are leaving.
Do you believe Netflix will be able to grow their subscriber base to 250 million in ten years?
[H/T CNBC]
