Rumors have been swirling in regards to the success potential of Netflix. The company’s stock closed on January 13, 2017 with an increase of 3.5%. Further good news may be released on January 18th with the company’s earnings report. Things might not be perfectly rosy for the burgeoning media and entertainment giant. The company had suffered major losses not too long ago.
Netflix forever changed the business of home entertainment rentals. The company popularized the simple concept of renting a DVD via the mail. A monthly subscription service — a nominal one — was also instituted as part of the business plan. Giants such as Blockbuster did not know how to react to Netflix’s brilliant concept. Netflix soon put a lot of video rental companies out of business.
Netflix concept of online streaming programming is looking to challenge the broadcast and cable industry. Netflix has had more than a little bit of help from Marvel Comics. Daredevil, Jessica Jones, and Luke Cage allowed Netflix to ride the wild popularity of Marvel’s superhero films. Amazon and Apple clearly noticed the success and popularity of Netflix’s endeavors. Amazon has launched streaming programming. Apple will do so in the future.
These expansive projects do come with massive costs. Netflix surely picked up a tremendous number of subscribers thanks to its streaming endeavors. Are the costs being covered by the money infused by the new subscribers? Only the company’s quarterly earnings reports can answer that question.
Summer of 2016 revealed Netflix lost $6 billion in market value, a dangerously massive amount to lose. Netflix could reasonably recoup all that lost market share. Increasing company revenue streams and expanding its market would be required. Both are tasks the company’s executives are clearly working on. Likely, management is looking at cutting spending as well.