More end users are switching to streaming television and movies. This has caused problems for television providers, but companies that have a strong presence or are poised to expand have a great opportunity ahead. Here are the companies that are in play in the streaming entertainment industry.
Netflix, Inc. (NASDAQ:NFLX) is the giant when it comes to online streaming entertainment. The company suffered when it changed its subscription services about a year and a half ago, but in the last year the stock has grown by over 250%. User subscriptions are continuing to grow in the last few quarters.
Net income has suffered this past year due to the higher cost of goods. The company has been signing new agreements to deliver content from production companies. This has caused its gross margins to drop. The company’s net profit margin has dropped to just 0.65%–in 2010 the net profit margin was 7.4%. These margins will likely stay low as content costs remain high.
Netflix, Inc. (NASDAQ:NFLX) now has an exclusive deal to stream content from The Walt Disney Company (NYSE:DIS). No other online service can stream its content. This is a huge benefit for Netflix, Inc. (NASDAQ:NFLX) in attracting families and young subscribers.
The new content will bring more users this year, and international subscribers are expected to double this year. Total earnings are expected to grow by 300% or more this year. Investors should definitely look for big gains this year as long as costs don’t rise.
This can allow different forms of video to be uploaded and monetized by content providers. Feature films can be revenue generators for producers on YouTube now. Google Inc (NASDAQ:GOOG) hasn’t announced what percentage it will take from this subscription, though a common content subscription fee is 30%.
YouTube currently generates its revenue from advertising before and during its short videos. YouTube itself will continue to be free, just like other Google Inc (NASDAQ:GOOG) services. There is now going to be an upgraded “freemium” service. Users can pay to have access to more and specialized content.
This may drive some additional revenue for the company, though it likely won’t be too much of an impact considering Google Inc (NASDAQ:GOOG) earns over $50 billion per year. This is a sign of Google serving the demands of its users and content providers. With so much attention on streaming entertainment, this is a positive sign for investors. Google Inc (NASDAQ:GOOG) is moving with the needs of the time.