Unlike Netflix, Comcast is choosing to focus on a deal with GE, which combined all of NBC’s media content with Comcast’s in a joint venture majority owned by Comcast. Comcast has added minority-owned networks and created kid-friendly videos and PSAs in addition to more local news on its NBC-owned channels. The success of the deal is evidenced by Comcast’s recent decision to buy out the 49% of the joint venture owned by GE.
Netflix recently announced a partnership with Dreamworks Animation Skg Inc (NASDAQ:DWA) to bring all new original kids television shows to Netflix. The move is part of Netflix’s strategy at original programming, as well as movies and shows with a wider consumer appeal.
This deal is beneficial for both companies.Dreamworks Animation Skg Inc (NASDAQ:DWA) attempted expansion into television could benefit from this as it would have a platform to reach consumers. It also gives these movies extra ‘thrust’ after the big screen, allowing for sequels and bigger box office results. For Netflix, this move is undoubtedly based on research. If this is what people are watching, Netflix will benefit by being the exclusive provider.
During 2012, Netflix only added about 5 million additional paying users in the domestic market. However, the company is expected to see huge growth from international markets, primarily throughout Canada and European market. It also expanded into the UK, Ireland, and four countries in Scandinavia. That has helped to boost revenue, but send profits lower and lower.
This year, however, it is able to capitalize on these new markets, and one can be more bullish on Netflix for its potential in growing revenue as well as subscribers. Current estimates call for the company to grow revenues by 18% this year to $4.26 billion and another 15% next year to $4.9 billion. Below is a table that shows how Netflix’s revenue has grown.
Summary
To capture a higher market share and grow rapidly in the international arena, Netflix needs to develop high quality content. It can develop such content by using data from current subscribers – an advantage no other company has.
Netflix share price once reached the $300 mark, but investors had a tough year in 2012. Even so, Hastings is leading Netflix in the right direction, and using an informed approach to do it. I predict shareholders will see some positive movement with Netflix in the coming months.
The article Growth Of On-Demand Video Bodes Well For This Content King originally appeared on Fool.com and is written by Maxwell Fisher.
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