Forget Analysts, Netflix (NFLX) is Killing Itself...
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This may not be a surprise to many -- as most of the Netflix (Nasdaq: NFLX) story really shouldn't be -- but Netflix has been pushing more and more to exit the DVD-by-mail business (found out to be a big mistake after initial efforts last year). In doing so, Netflix aimed more to to the streaming media side of things, whereby subs can get Netflix content on various devices from mobile phones to Microsoft's (Nasdaq: XBOX).
Here's the deal: it's funding the enemy. Many major media companies like CBS (NYSE: CBS), Time Warner (NYSE: TWX), and Viacom (NYSE: VIA-B) have reported earnings recently, with most attributing growth in their bottom-lines to Netflix. Netflix has been paying royalties and fees to the media companies for content which, put simply, has been gathering dust for years.
So, with little overhead on the licensing to Netflix, media companies have been deploying gobs of cash they might have otherwise not received into development of their own streaming services...to take out Netflix.
Obviously, Netflix isn't oblivious to this, having launched its own original series "Lillyhammer," and working on more content for the future.
How much will Netflix pay out this year? It's not clear yet. However, for its 2011 financials, Netflix reported the "change in streaming content liabilities" rose eightfold from $167.84 million in 2010 to $1.46 billion...a nice $1.3 billion pop. Investors might note that Netflix only brought in net $226 million for the period, which CEO Reed Hastings has addressed.
Netflix appears to be moving away from streaming deals, though, having liabilities of $397.6 million last quarter, down from a staggering $644 million in the preceding period.
Still, despite the numbers, analysts have Netflix turning a profit of 9 cents per share in 2012, moving to $2.18 per share in 2013. That's still half the $4.26 reported in 2011. That still doesn't include competition from Amazon.com (Nasdaq: AMZN), Hulu, Comcast's (Nasdaq: CMCSA) Xfinity, and a slew of others looking to take share, and doing so aggressively.
Here's another point: Comcast controls broadband access for million of Netflix subs. Though Hastings has cried foul in the past for Comcast throttling speeds on certain devices, the provider might be able to access the same metrics Netflix has (we're not sure if that's illegal for not...why would it be illegal though?). Tracking what broadband users are watching, though seedy, gives Comcast and other providers another upper hand in their streaming service development.
Shares of Netflix are 1.7 percent lower Friday with moderate volume.
Here's the deal: it's funding the enemy. Many major media companies like CBS (NYSE: CBS), Time Warner (NYSE: TWX), and Viacom (NYSE: VIA-B) have reported earnings recently, with most attributing growth in their bottom-lines to Netflix. Netflix has been paying royalties and fees to the media companies for content which, put simply, has been gathering dust for years.
So, with little overhead on the licensing to Netflix, media companies have been deploying gobs of cash they might have otherwise not received into development of their own streaming services...to take out Netflix.
Obviously, Netflix isn't oblivious to this, having launched its own original series "Lillyhammer," and working on more content for the future.
How much will Netflix pay out this year? It's not clear yet. However, for its 2011 financials, Netflix reported the "change in streaming content liabilities" rose eightfold from $167.84 million in 2010 to $1.46 billion...a nice $1.3 billion pop. Investors might note that Netflix only brought in net $226 million for the period, which CEO Reed Hastings has addressed.
Netflix appears to be moving away from streaming deals, though, having liabilities of $397.6 million last quarter, down from a staggering $644 million in the preceding period.
Still, despite the numbers, analysts have Netflix turning a profit of 9 cents per share in 2012, moving to $2.18 per share in 2013. That's still half the $4.26 reported in 2011. That still doesn't include competition from Amazon.com (Nasdaq: AMZN), Hulu, Comcast's (Nasdaq: CMCSA) Xfinity, and a slew of others looking to take share, and doing so aggressively.
Here's another point: Comcast controls broadband access for million of Netflix subs. Though Hastings has cried foul in the past for Comcast throttling speeds on certain devices, the provider might be able to access the same metrics Netflix has (we're not sure if that's illegal for not...why would it be illegal though?). Tracking what broadband users are watching, though seedy, gives Comcast and other providers another upper hand in their streaming service development.
Shares of Netflix are 1.7 percent lower Friday with moderate volume.
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