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Long term, what an excellent company... very large scale, in part by holding down prices (and not enforcing shared login rules) for so many years to gain that scale, and building that into a bit of a self reinforcing moat with the most content (they have the most $ to spend), which means they should be able to sign the largest deals while keeping it lower per subscriber on a cost basis, and they offer a very wide selection so if customers have to pick and choose from one or the other streaming provider, Netflix will be at the top of their consideration set in terms of value per $. Think about how many complained over the last few years about the price increases, and how many are still watching Netflix. The value proposition is almost just obvious. Everyone else is playing catch up.
The 20 year bull case, in my opinion, is they keep spreading to other countries, and they (in a reverse course from the early no-ad days) further optimize ad targeting to drive revenue higher and potentially allow for revenue and costs to further diverge leading to wider margins. Outside of ad targeting, I've seen Netflix half heartedly try to gain ancillary revenues such as selling merchandise for some movies (Netflix.shop), but my opinion is that they haven't done a really good job at this. I loved Pinocchio for example, and wanted something meaningful, but when I looked at the site, it was seemingly generic stuff they could slap things on and not more intricate stuff like higher end action figures, scene sketches by the director, and so on. It's too easy to print t-shirts with print shops who can churn them out all day, even in low quantity, so risk is minimal, so I get why they do it this way, but would love to see them put real effort into this.
Anyone have a view on how they can improve ad targeting? Is this where something like the trade desk comes in? If so, what kind of data do they need, is it available, and is there any way we can recognize it as being in progress as a user before margins widen and the street picks up on it all?
No view on the ad piece but if the 20 year bull case is so strong, why is there such a lack of insider holding/buying?
Despite the potential consolidation w/ warner bro's, it feels like streaming has somehow ended up in a very fragmented state quite different from what we were promised with the advent of streamers. Now everyone needs to have like 6 of these subscriptions.
Not obvious to me how one clearly rises above the others and the lack of insider trading further diminishes any confidence IMO.
The WB acquisition could make it the true winner with the most "unmissable" content of any streaming platform. Disney has its well defined target audience and Apple TV+ isn't yet considered a big one. Not sure where Prime Video and Paramount stand but they don't look like a big threat to what NFLX + WB could become.
I agree! I'm curious to see how the merger looks like. If Netflix catalog grows, and subscribers get more content without a big price increase, then it'd be a huge win. Seems like Netflix is expanding in Asia too, which is a good sign. PE ratio seems in a good place. I'd invest on this one.