Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Netflix, Inc. (NFLX), Google Inc (GOOG): Winners in Streaming Entertainment

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)

Netflix, Inc. (NASDAQ:NFLX)

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.

YouTube

Google Inc (NASDAQ:GOOG) owns the content delivery site YouTube. YouTube just announced that it will offer a paid-for subscription service for content producers. The content providers will be able to charge between $0.99 and $9.99 per month for unlimited use of content.

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.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.