How Netflix Views The Future of TVs

Netflix 7 How to Hacks

Netflix, Inc. (NASDAQ:NFLX) has released a document reflecting the company’s outlook on the future of television. The 11 page document released by the company digs deeper into the future of television and also the future winners. The company released the document after it successfully posted its earnings report for the first quarter 2013.

How Netflix Views The Future of TVs

Netflix posted revenue of $1 billion and total subscribers stood at 33 million towards the end of the quarter. In the document, there are no new and specific information, but there is guidance provided by Netflix on how the company is looking forward to transform the business of streaming video.

According to a Netflix, Inc. (NASDAQ:NFLX) document, linear TV viewing trend will soon fade away and will be replaced by Internet TV apps. Among the heap of reasons, jetting Internet speed is one of the most dominant ones. The other reason being subscribers like to stream higher resolution video.

Netflix is at present spending approximately $350 million to upgrade its services and to maintain the same. The developments, which Netflix, Inc. (NASDAQ:NFLX) is making, are making the company’s service available to various platforms and devices, upgrading the user interface, controlling and keeping track of performance among others. The company is thought to be shelling out a large amount, but it looks meager in comparison to the content budget of the Netflix.

The massive content library, which Netflix maintains, comprising of movies and TV shows bring in a total budget of $2 billion per year. The major chunk of this amount is used in closing deals like agreements that Netflix entered with Disney last year in December. Netflix spends only a minimal portion of its budget on exclusive original content like House of Cards, Hemlock Grove, Arrested Development, and Orange is the New Black.

Netflix, Inc. (NASDAQ:NFLX) is planning to stream only those contents, which holds a decent long term value. It implies the content, which subscribers can re-watch, is considered by the company as having long term value. The complete content would not always be available in the library of Netflix.

The company is looking forward to increase its subscriber base by about 2 to 3 times the base of HBO. Expanding customer base by 2 to 3 times of HBO means that in future Netflix, Inc. (NASDAQ:NFLX) will have 60 million to 90 million subscribers. The company though, is seeking to achieve this target and knows that it will take a long time. Netflix, Inc. (NASDAQ:NFLX) is considering, Inc. (NASDAQ:AMZN)’s Prime and Hulu as secondary and potential competitors, but is sure that these services will not be able to offer the content, which Netflix will offer.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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