Revenue and Investment despite High
Netflix, Inc. (NFLX)
Good Long-Term Investment Despite High Valuation
Rating:
BUY
RESEARCH REPORT:
PUBLISHED APRIL 23, 2014
If there is anything that is universal across the world, it is certainly people’s love of media content – specifically movies and television. In fact, last year global movie ticket sales set a new record rising to
$35.9 billion. Considering nearly 70% of that total came from international markets outside the US, it is safe to say that we are not the only ones enjoying our own movies. Although only up 5% from 2012, international movie ticket sales are up 33% from five years ago. Meanwhile, ABI Research put out a report earlier this year saying that worldwide pay-TV subscribers are expected to exceed 1.1 billion by
2019, aided by the help of the increasing internet protocol television (IPTV) segment.1 At the end of
2013, there were approximately 903.3 million pay-tv subscribers worldwide which generated nearly
$250 billion in service revenue. Separately, IPTV operators reported roughly 92 million subscribers generating around $37 billion in service revenue. Although a CAGR of only 4% for the overall market is not as impressive as the 18.5% YoY growth experienced in the IPTV operators alone (their CAGR is expected to be closer to 10%), it clearly demonstrates increasing demand in general over the next several years.2
Ultimately, when you are talking about a $300+ billion global market annually between movies and TV, there is a significant push to grab every dollar you can from that market. One such company that has revolutionized the movie and TV industry while continually growing its subscriber base is Netflix – a company that nearly every person on Earth knows about and is easily identified by their bright red envelopes. Netflix, Inc. (NFLX) is an internet television network with more than 48 million members in over 40 countries across the world. The company operates in three segments: domestic streaming,
Good Long-Term Investment Despite High Valuation
Rating:
BUY
RESEARCH REPORT:
PUBLISHED APRIL 23, 2014
If there is anything that is universal across the world, it is certainly people’s love of media content – specifically movies and television. In fact, last year global movie ticket sales set a new record rising to
$35.9 billion. Considering nearly 70% of that total came from international markets outside the US, it is safe to say that we are not the only ones enjoying our own movies. Although only up 5% from 2012, international movie ticket sales are up 33% from five years ago. Meanwhile, ABI Research put out a report earlier this year saying that worldwide pay-TV subscribers are expected to exceed 1.1 billion by
2019, aided by the help of the increasing internet protocol television (IPTV) segment.1 At the end of
2013, there were approximately 903.3 million pay-tv subscribers worldwide which generated nearly
$250 billion in service revenue. Separately, IPTV operators reported roughly 92 million subscribers generating around $37 billion in service revenue. Although a CAGR of only 4% for the overall market is not as impressive as the 18.5% YoY growth experienced in the IPTV operators alone (their CAGR is expected to be closer to 10%), it clearly demonstrates increasing demand in general over the next several years.2
Ultimately, when you are talking about a $300+ billion global market annually between movies and TV, there is a significant push to grab every dollar you can from that market. One such company that has revolutionized the movie and TV industry while continually growing its subscriber base is Netflix – a company that nearly every person on Earth knows about and is easily identified by their bright red envelopes. Netflix, Inc. (NFLX) is an internet television network with more than 48 million members in over 40 countries across the world. The company operates in three segments: domestic streaming,