Growth Of On-Demand Video Bodes Well For This Content King: Netflix, Inc. (NFLX), Dreamworks Animation Skg Inc (DWA), Comcast Corporation (CMCSA)

Recently, the Nasdaq Composite Index fell by a fraction to 3,160, while the Philadelphia Semiconductor Index came down by 0.3% and the Morgan Stanley High Tech 35 Index fell by 0.1%. So how is it that on the same day Netflix, Inc. (NASDAQ:NFLX) picked up more than 2% to $179 in after-hours trading?

Chief Executive Officer, Reed Hastings, claims to have the answer when he spoke at a Morgan Stanley investors conference in San Francisco. According to him, it’s all in the data. Its new series ‘House of Cards’ will be one in a long line of carefully planned out original series that will skyrocket Netflix, Inc. (NASDAQ:NFLX) back to its rightful place as a leader in the industry.

Netflix, Inc. (NASDAQ:NFLX)Netflix, Inc. (NASDAQ:NFLX) has not always been able or willing to cater to the world of ‘my way, right away’ – an odd choice for an ‘on demand’ movie streaming company. Its simple strategy of movies and TV shows for immediate streaming was just a cheaper, more efficient method of entertainment that gave power to the consumer. No longer did they have to pay for channels they didn’t want and the tedium of commercials before, between, and after their shows.

But this system gave Netflix, Inc. (NASDAQ:NFLX) an even more powerful tool that it could use in its battle against other on demand programming like Comcast Corporation (NASDAQ:CMCSA) : data. The company is able to collect intelligence on what people watched and when, which allowed them to conjecture the ‘why.’

No other company on the planet has more information on movie and television watching habits and preferences than Netflix, Inc. (NASDAQ:NFLX), and that is where the company has an advantage over other companies trying to jump into the internet or online video provider market., Inc. (NASDAQ: AMZN) is rolling out its new ‘Prime Instant Video’ and Hulu is focused on TV episodes as close to original air date as possible.

According to a news release:

Netflix CEO Reed Hastings insisted today that the rise of rivals Amazon Prime Instant Video and Hulu Plus has actually helped the relationships his video streaming service has with studios.

The competition has led to bidding in the marketplace for programming, allaying studios’ fears of Netflix, Inc. (NASDAQ:NFLX) dominance in video streaming.

“One fear they had is that we would run away with the prize…. They don’t feel as strategically vulnerable,” Hastings said at Morgan Stanley’s Technology, Media & Telecom Conference this morning. “It’s an overall healthier situation than it was two years ago.”

Some estimates claim that more people watched movies streamed online than on DVD last year. Who better to know what was watched than the company that has unparalleled access to viewers’ opinions and can review over 30 million plays a day, four million ratings, three million title searches, and information about the time of day when shows were watched. Netflix can also find out on what devices movies or shows were watched.

But how will it use this information to its advantage?

The war for content

Netflix can use this information to determine what type of content to acquire. And in today’s market, content is the name of the game.

Other companies have been trying to get a leg up on Netflix, Inc. (NASDAQ:NFLX) by gaining exclusive rights on content. Comcast, for instance, made a deal with HBO, owned by Time Warner, to extend the licensing agreement into the next decade for a select number of comedies and drama series. Netflix, in response, has also made deals with Time Warner for exclusive rights to eight of Warner’s drama TV series. Names include proven favorites like ‘West Wing’ and ‘Revolution’, ‘Fringe’. It even has rights to the new premier series starring Kevin Bacon, ‘The Following.’ It has also announced a deal to acquire the exclusive pay-TV rights to Disney’s films beginning in 2016. Netflix became the first Internet-subscription video service to get those kind of rights.