VOD : Netflix/Streaming Services

[OLD BOY]

Originally Posted by jfman

Where does the money come from to diversify if they are $30bn in debt?

In any other sector this would be a business in distress. The shareholders are essentially hoping someone buys them because of their existing technology and customer base.

Larger companies with existing profitable businesses (and crucially assets to support their debt) like Liberty, Comcast or dare I even suggest Amazon could pull the rug from under a Netflix very easily if it was worthwhile. I suspect it isn’t, but it’s a precarious position.

Yes, they are in debt because they are investing heavily in the future. Clearly, investors believe that the future is worth investing in as far as this company is concerned.

In time, Netflix will presumably give rights to show their older original content and bolster their income that way.

[jfman]

Plenty of companies go bankrupt on the same basis.

[Horizon]

Originally Posted by jfman

https://www.forbes.com/sites/greatsp.../#17d0a07b2886

Interesting thoughts from Forbes.

Netflix has debt of $200 per subscriber. No wonder they’ve put their prices up.

I’m not predicting doom and gloom for Netflix but it clearly can’t exist in the “low cost” subscription model forever.

I currently own Netlfix shares and I see it going either two ways:

1. They collapse under their debt mountain before generating a penny in profit.
2. Their subscriber numbers continue to accelerate upwards allowing free cash flow to bring down their debts and who knows, even make a profit at some point before 2100.

Obviously, I prefer option 2, but its a high risk game they play. But Disney's service doesn't start until the end of the year and it will be several years, if at all, before they can catch Netflix, in my opinion. That's what I'm betting on. First mover in any field is still a major advantage.

At some point they have to stop spending all that money and hope they have enough content to keep existing subscribers and attract new ones.

[muppetman11]

Disney doesn't need to have as many subscribers to have an impact on Netflix with so many options around the corner what happens if Netflix growth stalls ?

[denphone]

Originally Posted by muppetman11

Disney doesn't need to have as many subscribers to have an impact on Netflix with so many options around the corner what happens if Netflix growth stalls ?

Disney's huge back catalogue and their more recent content is something Netflix cannot compete with.

[jfman]

I hope Netflix are part of the diverse landscape in the future, but I also hope it's with a sustainable business model.

As Eleven Sports have demonstrated it's possible to leave rights holders, your own subscribers and subscribers of other platforms worse off by your participation in the market.

The range of choice available is better off for Netflix as part of it, for now, but if they are just going to be another platform with premium add ons for sports, near cinema release movies, etc. then what's in it for the average consumer?

[Horizon]

Originally Posted by muppetman11

Disney doesn't need to have as many subscribers to have an impact on Netflix with so many options around the corner what happens if Netflix growth stalls ?

Depends where that growth stalls, if it does at all.

If its in the States, they probably will be unable to generate anymore new subscribers anyway, so not a problem. If its internationally the growth stalls, then yes, that's a major problem and I'd expect they'd go belly up pretty quickly as investors rush for the exit door.

I'm expecting international growth, year-on-year for the next three years, by which time, some of their revenues need to go into paying some debt.

Netflix's response about Disney is they will have enough of their content to cushion the loss of Disney's content and they say they welcome the competition, as that grows the overall streaming market for everyone. THat's their line. I think they have three years before Disney will impact their business and they need to be big enough to cushion that impact.

I see Netflix as Sky was at the beginning. If they can grow big enough quickly, they will remain top dog. Comcast and others have already said that they intend to continue to licence some of their content to other companies, so that's a major plus point for Netflix. Without other Hollywood material, I'd be far more nervous about Netflix's prospects.

Depending on price, there's room for probably 4-6 global streamers here, it's just a case of how the cake is sliced and by whom.

---------- Post added at 16:41 ---------- Previous post was at 16:38 ----------

Originally Posted by denphone

Disney's huge back catalogue and their more recent content is something Netflix cannot compete with.

Netflix has 139 million customers. Disney has zero for its global streaming app, because it doesn't exist yet.

It's Disney who has to compete and they will, I've no doubt about that all. (I own Disney shares too.)

---------- Post added at 16:47 ---------- Previous post was at 16:41 ----------

Originally Posted by OLD BOY

In time, Netflix will presumably give rights to show their older original content and bolster their income that way.

I hope not! Kinda destroys their business model if they do that.

The content they make now, in theory, should still be making them money for years to come. If they start licence it to others, it becomes a complete mess. However, I rule nothing out.

[denphone]

Originally Posted by Horizon

Netflix has 139 million customers. Disney has zero for its global streaming app, because it doesn't exist yet.

It's Disney who has to compete and they will, I've no doubt about that all.

Just because they have 139 million customers now does not mean that will be the case in a few years time as there have been many big companies who many thought were untouchable only to find a few years after these companies were struggling to survive in a ever changing market.

[Mad Max]

Is this an anti Netflix thread......

[denphone]

Originally Posted by Mad Max

Is this an anti Netflix thread......

Don't be so daft MM as its a discussion with the usual differing views on the future streaming market.

[jfman]

Originally Posted by Mad Max

Is this an anti Netflix thread......

It occurred to me it would be read that way, but perspective can get lost from time to time.

[Horizon]

Originally Posted by denphone

Just because they have 139 million customers now does not mean that will be the case in a few years time as there have been many big companies who many thought were untouchable only to find a few years after these companies were struggling to survive in a ever changing market.

Err??

Which big companies had that many customers and then lost them a few years later?

Originally Posted by Horizon

Err??

Which big companies had that many customers and then lost them a few years later?

MySpace had 76 million users, Google+ had 540 million users...

[denphone]

Originally Posted by Hugh

MySpace had 76 million users, Google+ had 540 million users...

You only have to look at this company who were massive before certain rivals started to park on its lawn and as you have pointed out some of the other examples as well and the business world is littered with casualties who thought they were untouchable.

https://en.wikipedia.org/wiki/Blockbuster_LLC

[Horizon]

Originally Posted by Hugh

MySpace had 76 million users, Google+ had 540 million users...

Users being the word here.

Netflix has 139+ paying customers, not users.