Netflix Won the Streaming Wars. What’s Next?
By Movieguide® Contributor
Netflix is the undisputed winner of the streaming wars. So, what’s next?
“Netflix has won the streaming wars. Case closed. But where does the company go from here?” research firm MoffettNathanson wrote in a note to its clients. “The short answer: There’s lots of runway ahead.”
The firm pointed to the streamer’s ad-supported subscriptions as a key factor in its continued growth.
The ad-supported tier — which costs just $7.99 a month, as opposed to the premium package’s $24.99 price tag — has brought Netflix 41 million new subscribers globally in the last year.
MoffettNathanson predicts that Netflix will generate $6 billion in annual ad revenue alone by 2027 and as much as $10 billion by 2030. The firm even upgraded the streamer’s stock price target from $850 to $1,100.
“Despite all of Netflix’s recent success in reinvigorating growth, we believe its engagement will allow the company to better monetize and unlock greater profits in the years ahead,” MoffettNathanson explained.
MoffettNathanson analyst Robert Fishman noted that, because of its large number of subscribers, Netflix can afford to spend more on their original content, which leads to even more subscribers.
“Because it has more content, it drives better engagement, leading to more subscribers and possibly better pricing power in a virtuous cycle,” he explained. “This is the enduring power of Netflix’s first-mover advantage in streaming.”
READ MORE: HOW DID NETFLIX WIN THE STREAMING WARS?
These numbers contradict the dire predictions many had for Netflix after it announced it would be raising its subscription prices.
“As we continue to invest in programming and deliver more value for our members, we will occasionally ask our members to pay a little more so that we can re-invest to further improve Netflix,” the streamer wrote in a letter to investors.
Another factor contributing to Netflix’s success? Its ventures into live sports, from NFL games to WWE matches.
“We are constantly trying to broaden our programming, and live events are one of those things and sports is part of those live events,” Netflix co-Chief Executive Ted Sarandos said during an earnings call. “This is a really fantastic thing.”
Rosenblatt analyst Barton Crockett added, “The subscriber growth seen in the last quarter was 100% without a doubt heavily affected by these live sports events. It was a great bet, and it paid off.”
READ MORE: THE SURPRISING CONTENT DRIVING NETFLIX VIEWS
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