2018 to be “an inflection for Netflix” according to analysts
Netflix is quickly becoming the king of the SVOD (Streaming Video On Demand) club, with a huge combination of “classic” content from previous years and bold new material that’s winning awards in its own right. Hot off the heels of its success with a bevvy of original programming including acclaimed 80s throwback horror series Stranger Things, analysts are expecting Netflix’s corporate achievements to catch up to its creative ones this year. And in that, they finally agree with what we’ve been saying at Dominion for well over a year.
Netflix’s share price has appreciated by 67% in the last 12 months
Source: Yahoo Finance
CRFA media and entertainment analyst Tuna Amobi is just one of many who see Netflix clearing major hurdles this year. Speaking to Business Insider, he said:
“This year is going to be an inflection for Netflix where they're going to, for the first time in their history, generate global profitability. That's a very important milestone for Netflix. The international business is going to gain even more traction and a lot has been said about the potential saturation in the domestic market for Netflix. Their results in the past several quarters show that there could be additional upside even within a domestic market. So Netflix has become the preeminent disruptor. And I think they're starting to reap the benefits of the content investments that they've made over the years and they will take those investments even higher this year in 2018.”
He’s not alone. At the end of last year, Piper Jaffray analyst Michael Olson also joined Dominion on the Netflix bandwagon, estimating that the company could have “over 100 million international subscribers by 2020.” He even suggested there were multiple ways Netflix could hit a high point of 164 million subscribers by then, and that’s not including China!
It’s not all plain sailing though, according to Amobi. He thinks that the critical mass Netflix has achieved could convince other media companies to view it as a threat. He said: “a lot of media companies are watching and they're kind of stepping out of that paradigm where Netflix, as much as they're getting a lot of money from Netflix for their content, but they're starting to view Netflix not necessarily as a friend but potentially as a direct competitor.”
However, one thing is for certain: with a huge audience of hardcore fans and even more groundbreaking programming coming in 2018, any media company that goes to war with Netflix will have a fight on its hands!
Dominion holds Netflix in its Global Trends Ecommerce Fund.
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