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General Category => Investment Ideas => Topic started by: bmichaud on October 25, 2011, 05:10:44 AM

Title: NFLX - Netflix
Post by: bmichaud on October 25, 2011, 05:10:44 AM
Down below 80 pre mt, which will be around 19x LTM EPS. Dare I think a  buy at these levels? 19x earning??? Tech would pay 19x sales for this thing.

I won't invest based on it, but I'd say big tech is taking a close look at 19x.
Title: Re: NFLX - Netflix
Post by: BargainValueHunter on October 25, 2011, 10:00:17 AM
What is the barrier to entry for Google/YouTube, Wal-Mart, Dish/Blockbuster, Amazon, Apple, News Corp., Comcast/Universal, Viacom, Hulu or TiVo?

If the answer is "high" I would invest. But I suspect that Netflix's moat is quite narrow and shallow.
Title: Re: NFLX - Netflix
Post by: watsa_is_a_randian_hero on October 25, 2011, 10:15:40 AM
Down below 80 pre mt, which will be around 19x LTM EPS. Dare I think a  buy at these levels? 19x earning??? Tech would pay 19x sales for this thing.

I won't invest based on it, but I'd say big tech is taking a close look at 19x.

I would not buy it here.  Too much risk with business model (porters 5 forces).  No-moat business - need a steep discount.  In addition, shady management.  What kind of management sells massive amounts of its own shares while using virtually all company free cash flow to buy back shares? 
Title: Re: NFLX - Netflix
Post by: hyten1 on October 25, 2011, 10:28:12 AM
i don't have a position in nflx, still watching

one point i want to make is in regards to nflx's moat. this has been discuss and talk about for quite sometimes. this is the biggest question for me now that valuation has become more reasonable.

the general concensus i hear is nflx's moat is small, to quote what bargainvaluehunter just stated "What is the barrier to entry for Google/YouTube, Wal-Mart, Dish/Blockbuster, Amazon, Apple, News Corp., Comcast/Universal, Viacom, Hulu or TiVo?"

however i am still analyzing this. To say XYZ can easily enter this area is a bit simplistic. Its not like these guys haven't tried or aren't trying. So how come all these big boys who have tried to compete with nflx have all to some degree failed (you can argue if they tried hard enough or if these guys haven't really tried).

google/youtube - nothing yet
walmart - doesn't seem like anything worked
dish/blockbuster - bb have been trying, and still are trying
amazon - their offering is still very limited
apple - itunes its been around for a long while
all the cable guys - all pretty much in same boat, a service like nflx will cannabalize their current biz, then again its prob what they need to do.

the moat i see nflx have (how strong is it I am not sure) is the size of their audience (which allow then to spend more dollars for content, then again many of the big boys can do that too, but why haven't they). and obivously their easy of use, nflx is pretty much on all devices its pretty ubiquitous.

thoughts?

hy

Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 10:28:21 AM
Regarding moats and/or complimentary products, Hastings mentioned all of the competitors BargainValueHunter is concerned with, while referencing them as "complimentary" content providers within their own "channel" sense. The KEY will continue to remain the provider of the most sought after "CONTENT" as he who garners the most EYEBALLS carrying their pocketbooks with them will win. Interesting concept surrounding the conundrum for all content providers going forward whilst considering the internet paradigm and "freedom factors," huh?   Here is a specific reference to competing forces affects:

6:20: How does Dish or Amazon streaming affect you?
RH: Neither one has added an impact.



Read more: http://www.businessinsider.com/netflix-earnings-2011-10?nr_email_referer=1&utm_source=Triggermail&utm_medium=email&utm_term=SAI%20Select&utm_campaign=SAI%20Select%202011-10-25#ixzz1boaeP3L7 

Overpaying for stock may be more a matter of subjectivity vs. hindsight objectivity in understanding "value." Akamai has a similar story unfolding which might not recover to the extent that Netflix will, especially for shares purchased in the $40 zip code.

A man's MILEAGE will always differ. The Wall Street butchers are doing a fine job gutting this one with all the RISK it presents to their INCUMBENT MONOPOLIES, however.   >:(
Title: Re: NFLX - Netflix
Post by: DCG on October 25, 2011, 10:36:21 AM
For their DVD service, their moat was their large distribution system.

For digital streaming, their moat really depends on their contracts, which makes evaluating their future so tough. The networks have the upper hand over Netflix (and other content providers) when it comes to pricing power, so their costs are going to continue to rise. The question was/is whether they could push those costs onto consumers. As the last couple months have shown, that isn't a very easy thing to do; at least not when they increase prices by 60% at once. When contracts expire, and Netflix is unable to renew them, such as what's happening with Starz, their content suffers.





Title: Re: NFLX - Netflix
Post by: hyten1 on October 25, 2011, 10:42:15 AM
DCG content cost issue is an issue for everyone in this biz that doesn't create your own content. So to compare to its competitors its all the same. Unless one argue they should get into content or the fact a company that solely distribute content won't survive or would have very small margins

peter, switching cost is low (so is google :), but that is besides the point). It would be the same for all its competitors.

i guess what this lead me to think is a pure content distributor will prob not be a good biz, unless they are the biggest and only one out there.
Title: Re: NFLX - Netflix
Post by: bmichaud on October 25, 2011, 10:51:29 AM
I think of it almost akin to Yahoo - the only reason Yahoo's core business is garnering any attention is its user base. Yahoo has zero moat, but its brand attracts users, which PE and/or other tech companies can take advantage of...

Look at what Dish is doing with Blockbuster - an absolutely brilliant move on Ergen's part to give his subs the option to tack on a Blockbuster subscription for $10 per month, costing Dish next to nothing in incremental expenses. It took Blockbuster getting to BK for its brand to be revitalized b/c it had a dying business model (much like a New York Times, which could be revitalized in a different form someday if the print segment dies), but Netflix is online, which is far from a dying business model.

I have no idea the quality of its earnings or the strength of its moat (I don't believe it has one), but given what other companies have done with these types of services (Dish with Blockbuster, MSFT with Skype, current Yahoo situation) in order to take advantage of the user base, it may quite quickly become an attractive takeout target.

Less than $10B in market cap?? That's PEANUTS relative to not only the amount of cash on tech balance sheets but also, more importantly, the STUPIDITY of the tech industry's capital allocation habits.


I'm not buying - just saw what it was down to pre-market on my way in this morning and wanted to throw it out there to see what people were thinking.
Title: Re: NFLX - Netflix
Post by: enoch01 on October 25, 2011, 10:51:57 AM

walmart - doesn't seem like anything worked

thoughts?

hy

http://www.walmart.com/cp/vudu/1066144
http://mashable.com/2011/08/29/vudu-walmart-success/

long WMT
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 11:10:03 AM
If content is king, and the internet is the vehicle for bringing more "cost effective" content to eyeballs globally, then every piece of "content" along with its "creator" is valuable for consumption, like never before in the history of "media," entertainment or otherwise. 

Is Netflix doing any content creating by working with groups of people on their own who produce and create?

http://www.hollywoodreporter.com/live-feed/netflix-house-cards-hbo-producers-252501

Dumb em down, overpriced "subscription bundles" tied to "walled gardens" are fast becoming ancient relics. You must go OVER THE TOP to wherever you are individually satisfied, in this brave new content world.  ;)   Content owners seeking mass audiences better also remain mindful over the "quality" of their NETWORK STREAMS!  ;D     
Title: Re: NFLX - Netflix
Post by: DCG on October 25, 2011, 11:14:21 AM
DCG content cost issue is an issue for everyone in this biz that doesn't create your own content. So to compare to its competitors its all the same. Unless one argue they should get into content or the fact a company that solely distribute content won't survive or would have very small margins


The difference is that Netflix is (or at least was) trying to be the low-cost provider. And, it's all they offer. Larger companies like Amazon, Dish, Comcast, DIRECTV have other ways to absorb the costs, as streaming videos are not their main revenue driver. Streaming content can be viewed more as a feature than a product.
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 11:39:39 AM
Hmm, then the product relies inside of he who "delivers the stream."

Who is that DCG? And, where is their a major product differentiation when you jettison "Amazon" away from Dish, Comcast, Direct TV, and let me add some last mile telecom monopolists including AT&T as well as VZ for effect? 

Of course, the more VIDEO becomes pervasive over communication networks via the internet versus their historical use, "delivering quality streams" as a "product set" becomes absolutely, undeniably, essential and crucial to the ones offering such "features" to their customer bases.  ;)     

<Streaming content can be viewed more as a feature than a product.> 
Title: Re: NFLX - Netflix
Post by: DCG on October 25, 2011, 11:58:47 AM
Hmm, then the product relies inside of he who "delivers the stream."

Who is that DCG? And, where is their a major product differentiation when you jettison "Amazon" away from Dish, Comcast, Direct TV, and let me add some last mile telecom monopolists including AT&T as well as VZ for effect? 

Of course, the more VIDEO becomes pervasive over communication networks via the internet versus their historical use, "delivering quality streams" as a "product set" becomes absolutely, undeniably, essential and crucial to the ones offering such "features" to their customer bases.  ;)     

<Streaming content can be viewed more as a feature than a product.>

I'm a bit confused about you are trying to say, but what I'm saying is that companies like Amazon Dish, Comcast, directv etc are able to offer streaming services as an additional feature to their main products and services (which are their main revenue drivers). In other words, it's part of a larger ecosystem of offerings, whereas with Netlix, it (in addition to DVD rentals that they are trying to move away from) is their only real offering.

I know you're trying to turn the focus onto LVLT, and yes, the communication networks are important to online streaming, but thus far, the real winners have been the producers of content, as well as the providers that have been able to distribute content with scale, and not the communication providers. Widespread use does not automatically = profits for the networks like LVLT.

Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 12:11:35 PM
Yes, you should remember that Netflix's "quality of stream" is dependent upon Level 3's internet "product sets," and that the incumbent monopolists who "own networks" as well as "content," and are wanting to dictate their content down our throats because of their historical stranglehold on "last mile" communication links including keeping us inside of their "walled gardens" by discriminating against competing content, will not last much longer.

And, if Netflix continues to provide high quality streams along with much sought after "content," their customers will continue enjoying their experiences and stay with them. 

Tomorrow's freedoms, liberties, education, politics, eCommerce, entertainment and more--those streaming features--reign in Over The Top Video(OTTV) experiences as well as data exchanges--while all Internet Protocol Roads-the product sets-go through LVLT.  ;D

<I know you're trying to turn the focus onto LVLT,>   
Title: Re: NFLX - Netflix
Post by: Kraven on October 25, 2011, 12:12:45 PM
Tilson is now long NFLX.

http://blogs.wsj.com/overheard/2011/10/25/tilson-buys-netflix-on-tuesdays-crash/
Title: Re: NFLX - Netflix
Post by: DCG on October 25, 2011, 12:45:37 PM

Tomorrow's freedoms, liberties, education, politics, eCommerce, entertainment and more--those streaming features--reign in Over The Top Video(OTTV) experiences as well as data exchanges--while all Internet Protocol Roads-the product sets-go through LVLT.  ;D
 

And yet LVLT still seems to have no pricing power.
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 02:18:32 PM
By the time the market believes in LVLT's "pricing power" you won't pay $1.62 pps today, oops, I mean $24.35 pps, rather, you might be paying $75 pps or more instead. To be frank, when you keep pondering my "qos" commentary, and thinking about how Reed is going to keep his "valuable customers" and others across the whole internet space must keep theirs in order to stay alive and thrive, you might start believing in "pricing power" ahead of the silly crowd.

Check it out, and listen carefully to Reed's VISIONS about STREAMING. He will need to rely on Big (3) more than ever, especially while he crosses the pond into Mother England during Q1.

Pay me now, or pay me later, it doesn't matter as much as how dearly somebody is going to pay me some day sooner rather than later.  ;)   

http://www.shareholder.com/visitors/event/build2/mediapresentation.cfm?companyid=NFLX&mediaid=49662&mediauserid=0&TID=1462879439:38b2e37e12c43b928930b67b2d2f2b8e&popupcheck=0&shexp=201110251641&shkey=99c31660a9db246c27befb3445992ce5&player=3 
Title: Re: NFLX - Netflix
Post by: DCG on October 25, 2011, 02:52:42 PM
By the time the market believes in LVLT's "pricing power" you won't pay $1.62 pps today, oops, I mean $24.35 pps, rather, you might be paying $75 pps or more instead.
Pay me now, or pay me later, it doesn't matter as much as how dearly somebody is going to pay me some day sooner rather than later.  ;)   


Sooner? You think the stock is going to 75 soon while they're expected to lose well over $7 a share in fiscal 2012?
Title: Re: NFLX - Netflix
Post by: Hester on October 25, 2011, 03:18:52 PM
It's appropriate that this Netflix thread ends in a LVLT conversation.
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 03:24:31 PM
DCG, are you baiting me into converting bmichaud's "NETFLIX" thread into another LVLT thread? I'll be banished from this board forever, if I do!  ;D

I'll say this though. At $75 pps with an enterprise value of only $23B in exchange for PP&E at $37.5B conservatively, and a price to sales ratio of just 2.38 using early post merger, conservative $6.25B revenues, anything is possible when "Mr. Market" flips his head around in the right direction!       

Enjoy's Reed's conference call and format because it's an excellent one for identifying the trends we at Level 3 own and provide the products for. I'll tell you who Reed is not going to call to solve his "streaming needs" across the globe at the same time, however. He won't be calling Comcast or Akamai! Stay tuned for Akamai tomorrow, by the way. Woe to Akamai owners who hide inside the bellies of MONOPOLISTS, and who can't deliver large movie files in formats like HD nor do they maintain "CENTRALLY DISTRIBUTED CDN MODELS," as compared to "EDGE." :D 
Title: Re: NFLX - Netflix
Post by: alertmeipp on October 25, 2011, 04:37:30 PM
it's possible if the market sees the clear path forward.
Title: Re: NFLX - Netflix
Post by: Myth465 on October 25, 2011, 07:11:57 PM
It's appropriate that this Netflix thread ends in a LVLT conversation.

All roads lead to LVLT didnt you get the memo.

I was reading the thread and at page 1 was wondering where the LVLT link would be. Too early.
Title: Re: NFLX - Netflix
Post by: rmitz on October 25, 2011, 07:18:46 PM
It's appropriate that this Netflix thread ends in a LVLT conversation.

All roads lead to LVLT didnt you get the memo.

I was reading the thread and at page 1 was wondering where the LVLT link would be. Too early.

It's actually more amusing if you think of it as a 6-degrees of Level3 game...
Title: Re: NFLX - Netflix
Post by: Myth465 on October 25, 2011, 07:22:19 PM
LOL anything related to internet is only 1 degree away.

I mean Berkshire has a website, that will fill those pipes.
Title: Re: NFLX - Netflix
Post by: alertmeipp on October 25, 2011, 08:13:15 PM
It's appropriate that this Netflix thread ends in a LVLT conversation.

All roads lead to LVLT didnt you get the memo.

I was reading the thread and at page 1 was wondering where the LVLT link would be. Too early.

It's actually more amusing if you think of it as a 6-degrees of Level3 game...

The LVLT discussion actually has some merit... I just don't know how to project the growth rate with good confidence and the technologies are improving daily, it seems like we can transfer more data with less day after day.
Title: Re: NFLX - Netflix
Post by: Myth465 on October 25, 2011, 08:47:34 PM
It has a lot of merit. In the LVLT thread.....
I dont see how its key to a thesis around Netflix, but again all roads must lead to LVLT.
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 25, 2011, 09:06:37 PM
I have to hand it to you guys! You have me cracking up tonight! Rmitz, your 6-degrees of Level 3 game comment still has me in stitches but Myth is right because it truly is closer to one degree in the case of Netflix, and not much more than two degrees for all others when thinking about "WHO" is THE INTERNET! ;) Truth be known; however, if this continues along, our board host is going to shut this game down! And, I will not be fully blamed because I have tried to keep you focused on Netflix as hard as it is with Level 3 doing so much HEAVY CONSTRUCTION LIFTING for them globally!  ;D

Listen carefully to Reed Hastings' conference call again, and keep asking yourselves how does he know so much about AOL's "legacy" dial up business if he is not being advised by, Jim Crowe, maybe? LOL, but I am not kidding.

Think about the international subscriber growth rate numbers-study them before your bedtimes tonight-including South America and then imagine England and Ireland, and keep saying to yourselves, how do they do that, and if there is somebody else in the space, who is doing it for them?

As importantly, watch that internet free loader historically, Akamai's report tomorrow and by all means stay focused and tuned into Big (3)'s report on November 2nd!

CHEERS!  ;) 
     
Title: Re: NFLX - Netflix
Post by: Myth465 on October 25, 2011, 09:22:43 PM
As strange as it sounds I would say LVLT or some other data bandwidth / compression provider are more likely to benefit from the digitization of film, then the streamers. Content is proving to be king, and the content providers are basically king makers.
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 26, 2011, 07:24:04 AM
With rare exception, there is only ONE KING of BANDWIDTH opening up the necessary FLOODGATES and SUPPLYING valuable, one day in the future, scarce fiber to every content provider and would be content provider across the globe, yet Myth writes this: 

<I would say LVLT or some other data bandwidth / compression provider are more likely to benefit from the digitization of film, then the streamers.>

Because this game has been to name the ONE PLAYER who is ONE DEGREE away from or connected to every content owner with goods on the table or dreaming about creating goods to be placed on the table, Myth, will you please name your company? Name that "COMPANY," not "TUNE," Myth!  ;)

Once done, I will give freely to my investment brothers and sisters on this board more food which proves to be valuable "FIBER" in their diets.     
Title: Re: NFLX - Netflix
Post by: Kraven on October 26, 2011, 07:55:04 AM
WHY is every post about LVLT so F'ING strange?
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 26, 2011, 07:58:39 AM
Because there is NO FREE LUNCH on WALL STREET, so they say, and you must think outside of the box, including the silly RED BOX in supermarkets being provided by players like COINSTAR(CSTR) who must "CONVERT" ASAP!  >:(   
Title: Re: NFLX - Netflix
Post by: Hester on October 26, 2011, 09:13:55 AM
WHY is every post about LVLT so F'ING strange?

 ;D
Title: Re: NFLX - Netflix
Post by: ValueCarl on October 26, 2011, 09:46:34 AM
Hester, may I invite you over to our LVLT thread so I can introduce you to the rest of the players who have been banned to the Island of Misfit Toys?  ;)

Akamai's report should be interesting after market. No more Myth, give me FACTS about necessary bandwidth vs. compression techniques!  ;D

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_A/threadview?m=tm&bn=700&tid=241915&mid=241915&tof=2&frt=2
Title: Re: NFLX - Netflix
Post by: AZ_Value on October 26, 2011, 10:03:04 AM
WHY is every post about LVLT so F'ING strange?

 ;D

Hahahaha... I swear you just expressed my thought.

Half the time I don't even get it  ??? it's like a cult with its own way of communicating with the outside world  :D
After reading LVLT posts I sometimes wonder if I should pull out a calculator and a 10K or just do some kind of Indian dance praying for all video digital content around the world to come raining down on LVLT's bandwith lol

That being said, the day they're proven right and that thing takes off... Boy is the rest of the board gonna get it
Title: Re: NFLX - Netflix
Post by: DCG on October 26, 2011, 10:19:31 AM
It's a 1-2 person cult, with its own language which includes constant use of parenthesis, different font colors and emoticons.
Title: Re: NFLX - Netflix
Post by: tombgrt on October 26, 2011, 10:58:53 AM
http://www.zerohedge.com/news/whitney-tilson-explains-why-he-went-long-netflix-says-he-hasnt-lost-his-mind

Title: Re: NFLX - Netflix
Post by: Myth465 on October 26, 2011, 06:52:11 PM
It's a 1-2 person cult, with its own language which includes constant use of parenthesis, different font colors and emoticons.

LOL. What I have learned from the whole thing is there is someone out there for everyone. Who knew that there were 2 people in the world with a LVLT fetish, and that Parsad would help bring them together.

A few videos have surfaced with Tilson explaining his thesis.
Title: Re: NFLX - Netflix
Post by: AZ_Value on January 09, 2012, 02:44:01 PM
NFLX up 40% the last few days??

I don't know about you guys, but I'm getting ready for a heavy dose of Whitney Tilson in the media in the coming days.
His name should definitely be a top 5 mention alongside the usual suspects, you know, Tim Tebow, Jesus, Obama and Justin Bieber (or are these 4 the same person? I get confused sometimes)
Title: Re: NFLX - Netflix
Post by: Hester on January 09, 2012, 03:36:43 PM
NFLX up 40% the last few days??

I don't know about you guys, but I'm getting ready for a heavy dose of Whitney Tilson in the media in the coming days.
His name should definitely be a top 5 mention alongside the usual suspects, you know, Tim Tebow, Jesus, Obama and Justin Bieber (or are these 4 the same person? I get confused sometimes)

LOL
Title: Re: NFLX - Netflix
Post by: ERICOPOLY on January 11, 2012, 09:24:02 PM
NFLX up 40% the last few days??

I don't know about you guys, but I'm getting ready for a heavy dose of Whitney Tilson in the media in the coming days.
His name should definitely be a top 5 mention alongside the usual suspects, you know, Tim Tebow, Jesus, Obama and Justin Bieber (or are these 4 the same person? I get confused sometimes)

Are you talking about the legendary investment expert, Whitney Tilson?

http://seekingalpha.com/article/318944-the-time-is-now-to-buy-bank-of-america

Identifying and seizing on these opportunities is a well-known investing tactic utilized by legendary investing experts such as Warren Buffett and Whitney Tilson.
Title: Re: NFLX - Netflix
Post by: bargainman on April 23, 2012, 06:50:03 PM
NFLX down 15% in after hours...
Title: Re: NFLX - Netflix
Post by: rkbabang on May 24, 2012, 07:47:22 AM
I just came across an interesting story.  Remember the Netflix Prize from a few years back?  Basically Netflix was offering a $1M prize to whoever could improve their recommendation engine by a certain percentage (10% IIRC).    This article is about the team that came in 2nd (not winning the million dollars), because they submitted their solution 20 minutes after the winning team.  They now generate over $100M/year in revenue off of the technology they developed trying to win the prize.

This Startup Is Doing $100 Million In Revenue All Because It Lost A Netflix Contest (http://www.businessinsider.com/this-new-york-area-startup-scored-84-million-by-almost-winning-a-netflix-contest-2012-5)
Title: Re: NFLX - Netflix
Post by: DCG on January 23, 2013, 01:24:27 PM
Up 30% after hours after making a small profit.
Title: Re: NFLX - Netflix
Post by: Olmsted on January 23, 2013, 08:37:53 PM
Up 30% after hours after making a small profit.

My short trigger finger is getting itchy again.  Same broken business model, killing high-margin business ASAP in favor of an (at best) zero-margin business.  Price is back up.

Only difference that I can see is a real investor (Icahn) with an activist long position, that might keep Reed Hastings from doing stupid stuff.  Might...

Is Tilson still long?  Kudos if so.
Title: Re: NFLX - Netflix
Post by: ItsAValueTrap on January 23, 2013, 11:47:08 PM
Quote
My short trigger finger is getting itchy again.
I don't think it's a good idea to short great companies.  The overvaluation isn't really that extreme in my opinion.  It could even be fairly valued.
Title: Re: NFLX - Netflix
Post by: ShahKhezri on January 24, 2013, 03:50:21 AM
I was short from 259 to 150.  I wouldn't short here.  I can't wait for House of Cards to begin, if they roll out 1 great hit per year...
Title: Re: NFLX - Netflix
Post by: Olmsted on January 24, 2013, 06:27:25 AM
Just getting itchy.  Not doing it just yet.  I don't see any obvious negative catalysts on the horizon.  And frankly I haven't followed the company too closely since its big dump last year, so things could have materially changed.  Plus Icahn should keep management focused.

I personally wouldn't call the company "great," but that's just opinion.  Innovative, yes.  But I see little to no moat. 
Title: Re: NFLX - Netflix
Post by: txlaw on January 24, 2013, 06:56:21 AM
Up 43% at the opening?  Amazing.
Title: Re: NFLX - Netflix
Post by: rkbabang on January 24, 2013, 07:18:17 AM
Up 43% at the opening?  Amazing.

I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.
Title: Re: NFLX - Netflix
Post by: txlaw on January 24, 2013, 07:35:42 AM
Up 43% at the opening?  Amazing.

I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.

Yikes.  Yeah, you need to block that one out of your memory.

But at least you weren't short it!
Title: Re: NFLX - Netflix
Post by: rkbabang on January 24, 2013, 07:52:18 AM
Up 43% at the opening?  Amazing.

I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.

Yikes.  Yeah, you need to block that one out of your memory.

But at least you weren't short it!

Yes, someone always has it worse.  I wouldn't short Netflix.
Title: Re: NFLX - Netflix
Post by: Olmsted on January 25, 2013, 09:56:34 AM
Up yet another 14% today, high volume.  Short covering/margin calls today?  Or legit buying?
Title: Re: NFLX - Netflix
Post by: hyten1 on January 25, 2013, 10:04:55 AM
man i can't watch nflx


i also had options in nflx, but also nok but i sold before the pops :(
Title: Re: NFLX - Netflix
Post by: DCG on January 25, 2013, 10:05:05 AM
Because a valuation of 583x earnings makes total sense.
Title: Re: NFLX - Netflix
Post by: Olmsted on January 26, 2013, 08:59:08 PM
Because a valuation of 583x earnings makes total sense.

Right - but perhaps this is being valued as a potential strap-on acquisition now.  In that case the question is not what it's earning now, but what its worth to Apple or Amazon.  One could start to probe that question by
1) holding its revenue constant and cutting out some SG&A, software and development costs, and what it pays for servers (since presumably an acquirer could do that cheaper)
2) Adding an estimate of revenue generated by cross-marketing, or motivating users of another ecosystem (Apple or Amazon) into signing up
3) Reducing content costs because a bigger player should have more purchasing power

I personally think the buyout story is overhyped, but who knows?
Title: Re: NFLX - Netflix
Post by: ShahKhezri on February 03, 2013, 01:59:58 PM
I had a very unproductive weekend and binged on all 13 episodes of House of Cards.  It really is a good show, I just don't know why they put out all 13 at once.  Kevin Spacey was amazing.  Can't wait for the next season.

Francis Underwood is the new Heisenberg.
Title: Re: NFLX - Netflix
Post by: VAL9000 on February 03, 2013, 02:20:52 PM
I had a very unproductive weekend and binged on all 13 episodes of House of Cards.  It really is a good show, I just don't know why they put out all 13 at once.  Kevin Spacey was amazing.  Can't wait for the next season.

Francis Underwood is the new Heisenberg.

LOL same here - I've consumed 9 episodes so far this weekend.  Excellent show.  I'm looking forward to the next few episodes and the next season, too.

Title: Re: NFLX - Netflix
Post by: Liberty on February 03, 2013, 08:23:04 PM
I've just watched the first episode and thought it was so-so. Does it get better in subsequent episodes? Am I the only one finding a lot of the dialogue and acting kind of clunky?

It was still enjoyable, but I'm a bit disappointed. Maybe my expectations were too high.
Title: Re: NFLX - Netflix
Post by: ScottHall on February 04, 2013, 01:13:28 AM
I've just watched the first episode and thought it was so-so. Does it get better in subsequent episodes? Am I the only one finding a lot of the dialogue and acting kind of clunky?

It was still enjoyable, but I'm a bit disappointed. Maybe my expectations were too high.

I think it gets better, but it doesn't match the original and they've really made it something else. It's an homage, definitely, but it's a very different style of show.
Title: Re: NFLX - Netflix
Post by: VAL9000 on February 04, 2013, 03:12:53 AM
I've just watched the first episode and thought it was so-so. Does it get better in subsequent episodes? Am I the only one finding a lot of the dialogue and acting kind of clunky?

It was still enjoyable, but I'm a bit disappointed. Maybe my expectations were too high.

I agree, the pilot wasn't great.  I also thought the same of Breaking Bad, which turned out to be great TV.
Title: Re: NFLX - Netflix
Post by: VAL9000 on February 10, 2013, 07:01:15 AM
One thing that nobody has said much about with respect to House of Cards is product placement.  I don't know how much Apple and Sony paid to be featured the way they were, but here are some things I picked up on:
 - Everybody has an iPhone
 - One scene had five iPhones and four iPads all in a single shot, plus a Mac and another iPhone in the vicinity
 - "Oh is that a PS Vita?" - Frank Underwood
 - The PlayStation 3 start-up sequence played in full in a scene

That's what I did pick up on.. Not sure what I completely missed - clothes, cars, drinks, etc.

A theory that I have subscribed to for a while is that services such as Netflix and YouTube will benefit hugely from product placement.  Not only can they give much better demographic data on their viewers, they can also link content delivery with call-to-action behaviour.  E.g. if I move my mouse while watching House of Cards I should get links that allow me to buy everything I see on screen at that time.  Other implementations may be better than this, but that's the idea.

Developing this market is an opportunity for NetFlix, YouTube, Hulu, etc. because they own the connection between consumer and content.  Owning the content, as Netflix does in this case, gives them the freedom to experiment freely with these new opportunities.

Just a thought.  I have no holdings in Netflix but this is interesting enough to me that I wanted to bring it up.
Title: Re: NFLX - Netflix
Post by: rkbabang on February 11, 2013, 01:13:57 PM
One thing that nobody has said much about with respect to House of Cards is product placement.  I don't know how much Apple and Sony paid to be featured the way they were, but here are some things I picked up on:
 - Everybody has an iPhone
 - One scene had five iPhones and four iPads all in a single shot, plus a Mac and another iPhone in the vicinity
 - "Oh is that a PS Vita?" - Frank Underwood
 - The PlayStation 3 start-up sequence played in full in a scene

That's what I did pick up on.. Not sure what I completely missed - clothes, cars, drinks, etc.

A theory that I have subscribed to for a while is that services such as Netflix and YouTube will benefit hugely from product placement.  Not only can they give much better demographic data on their viewers, they can also link content delivery with call-to-action behaviour.  E.g. if I move my mouse while watching House of Cards I should get links that allow me to buy everything I see on screen at that time.  Other implementations may be better than this, but that's the idea.

Developing this market is an opportunity for NetFlix, YouTube, Hulu, etc. because they own the connection between consumer and content.  Owning the content, as Netflix does in this case, gives them the freedom to experiment freely with these new opportunities.

Just a thought.  I have no holdings in Netflix but this is interesting enough to me that I wanted to bring it up.

I'm on episode 9 now.  I like the show. I find it darkly entertaining.  Maybe because it provides me with comforting confirmation of my preexisting biases wrt Washington D.C..   I did notice the product placement, with Apple at least. The Apple logo is everywhere.  So much so that it is almost intrusive. There's a Mac on every desk, every character has an iPhone,  iPads all over the place, etc... 

There was even one scene where Underwood throws the iphone in the glass of water.  It didn't seem to fit in the story anywhere other than to call attention to the phone.
Title: Re: NFLX - Netflix
Post by: Liberty on February 18, 2013, 02:06:38 PM
I kept watching, and my first impression didn't last. I now really enjoy it, and it is of cinematic quality. I'm excited to have one more source of high quality TV (I've enjoyed series a lot more than films in the past few years).
Title: Re: NFLX - Netflix
Post by: eclecticvalue on February 18, 2013, 02:27:09 PM
Hey rkbabang, You could watch Frontline from PBS. That is the hard hitting realistic news reports out there. Especially the one where they cover the healthcare bill.
Title: Re: NFLX - Netflix
Post by: rkbabang on February 18, 2013, 06:12:10 PM
Hey rkbabang, You could watch Frontline from PBS. That is the hard hitting realistic news reports out there. Especially the one where they cover the healthcare bill.

It's very difficult for me to watch any TV newscast (either leftwing or right). I have to fight the urge to shoot into the screen the whole time.   House of cards is fiction at least. The difference is the same as the difference between watching a horror movie verses watching a newscast about a serial killer in your own community. It's not entertaining when the horrors are real.
Title: Re: NFLX - Netflix
Post by: Liberty on February 21, 2013, 07:39:56 PM
http://www.slate.com/blogs/moneybox/2013/02/21/house_of_cards_netflix_subscribers_say_the_series_will_make_them_less_likely.html

" According to a survey by Cowen and Co. released last week, 86 percent of Netflix subscribers said having the access to watch House of Cards makes them less likely to cancel their subscriptions."

Not sure what "less likely" actually means in the real world, or if any of that will mean much for netflix in the end, but in any case, I'm enjoying the series and looking forward to Amazon and others financing high-quality TV. The real winner is the viewer!
Title: Re: NFLX - Netflix
Post by: Liberty on February 21, 2013, 08:03:35 PM
btw, anyone else caught the reference to Elon Musk (I think( in episode 12 of House of Cards?

Raymond Tusk, the billionaire who's never held public office  8)


update: Well, now that I'm farther along in the episode, I realize that the character is nothing like Musk. Either the reference is just in the name + billionaire, or it's accidental and I read too much into it. Oh well. It turns out that the character they created is closer in some ways to Buffett (house, office, age...).
Title: Re: NFLX - Netflix
Post by: Liberty on March 10, 2013, 07:58:50 PM
Whoa, some people make bad decisions  :P

http://www.cbc.ca/news/world/story/2013/03/10/wrd-netflix-tattoo-free-subscription.html

(http://www.cbc.ca/gfx/images/news/photos/2013/03/10/li-netflixtattoo.jpg)
Title: Re: NFLX - Netflix
Post by: Phaceliacapital on April 23, 2013, 02:31:52 AM
Just throwing it out there:

http://www.bloomberg.com/video/netflix-to-pay-5-7b-for-future-content-NfBYeS5GR2OP91ou7YfraQ.html

and from the transcript:

http://seekingalpha.com/article/1360041-netflix-s-ceo-discusses-q1-2013-results-earnings-call-transcript?part=single

Quote
Erin Kasenchak - Director, IR
Great. Letís look at a few questions on financials. Could the company please quantify its off balance sheet content liability, specifically interested in those the total amount of obligation is outstanding, as well as the amount currently outstanding that is not on the balance sheet.

Reed Hastings - Chief Executive Officer
So Iíll answer this in total to because usually how we get this question. We had $5.6 billion liability -- $5.6 billion in commitment as of the end of December. That moved to $5.7 billion in commitments as of the end of March, $2.4 billion being part of liabilities on the balance sheet and $3.3 bill not on the balance sheet.


Up from 4.8 bn last year - I find this quite impressive

In perspective:

Total Assets as of 31/03/2013: 4.3 bn (1 bn cash)

=> Off balance sheet liability as % of TA: 77% - Which I find impressive and scary
Title: Re: NFLX - Netflix
Post by: bobp on April 23, 2013, 06:45:18 AM
Here's another view of the off balance sheet liability:   http://www.zerohedge.com/news/2013-04-22/does-netflix-34-billion-balance-sheet-liability-make-it-house-cards

I just heard Carmer and Faber on CNBC say that this shouldn't be an issue the way the company is performing. I had a feeling some here might not agree with that.
Title: Re: NFLX - Netflix
Post by: prunes on June 13, 2013, 12:10:09 PM
http://iveybusinessreview.ca/cms/3198/arrested-economics-assessing-the-business-case-of-netflixs-original-content/
Title: Re: NFLX - Netflix
Post by: Liberty on August 02, 2013, 10:39:49 PM
I know a lot of people here liked House of Cards. I enjoyed it a lot too, but I think I like their new series Orange is the New Black even more. It's not for everybody (fair amounts of lesbian sex, so if that's not your kind of thing...), but it's extremely well-written, well-acted, and well-produced. Big win for netflix, at least critically (not idea how well it's doing viewer-wise).
Title: Re: NFLX - Netflix
Post by: rkbabang on August 05, 2013, 11:49:05 AM
I agree. I enjoyed Orange Is The New Black at least as much as House of Cards, I highly recommend it.  On the other hand I watched Netflix's other new show "Bad Samaritans" and wasn't very impressed at all.  Low budget, simple/no story, bad acting, stupid jokes, etc.  Not worth watching at all.
Title: Re: NFLX - Netflix
Post by: boilermaker75 on August 05, 2013, 11:57:57 AM
I know a lot of people here liked House of Cards. I enjoyed it a lot too, but I think I like their new series Orange is the New Black even more. It's not for everybody (fair amounts of lesbian sex, so if that's not your kind of thing...), but it's extremely well-written, well-acted, and well-produced. Big win for netflix, at least critically (not idea how well it's doing viewer-wise).

I saw the above and it triggered my memory of this quote of Woody Allen's in his movie Love and Death, LOL,

Sonja: There are many different kinds of love, Boris. There's love between a man and a woman; between a mother and son...
Boris: Two women. Let's not forget my favorite.
Title: Re: NFLX - Netflix
Post by: tombgrt on August 05, 2013, 12:14:39 PM
Thanks for the recommendation Liberty. Saw the first episode and it looks promising. House of Cards was brilliant, hope they keep it up because I'll need some replacement for Breaking Bad next year.

The amount of high quality shows has really gone upwards these last few years. Homeland, Hannibal, Boardwalk empire, Game of Thrones, House of Cards, ... There have of course been plenty of good shows these last 10-15 years but the amount has been increasing rapidly imo. I just looked at an overview of all the shows I watched, mostly during college. 51! And that's not including fluff like Lost and Prison Break! :o
Title: Re: NFLX - Netflix
Post by: Liberty on August 05, 2013, 12:20:39 PM
Thanks for the recommendation Liberty. Saw the first episode and it looks promising. House of Cards was brilliant, hope they keep it up because I'll need some replacement for Breaking Bad next year.

The amount of high quality shows has really gone upwards these last few years. Homeland, Hannibal, Boardwalk empire, Game of Thrones, House of Cards, ... There have of course been plenty of good shows these last 10-15 years but the amount has been increasing rapidly imo. I just looked at an overview of all the shows I watched, mostly during college. 51! And that's not including fluff like Lost and Prison Break! :o

Glad you like it. Like most series, it takes maybe 3-4 episode to reach cruising speed (time to introduce characters, settings, etc), so if you like it from the start, it should only improve for you as it progresses.

I agree about quality TV. I've almost stopped watching movies for my "looking at a screen" entertainment.

If you're looking for more quality TV, check out the first two seasons of Justified (for some reason the quality of the writing goes down a lot in season 3, and I stopped watching around the 5th episode in that season). Similar thing happened with Dexter; the first two seasons were excellent (possibly because based on the original book), and after that the tone changes and writing quality goes downhill.

My trinity for quality TV is probably The Wire -- The Sopranos -- Six Feet Under, with Firefly somewhere on the side for sheer enjoyment (but with only 1 season, sadly).
Title: Re: NFLX - Netflix
Post by: LC on August 05, 2013, 01:54:06 PM
Quote
My trinity for quality TV is probably Firefly -- Firefly -- Firefly, with Firefly somewhere on the side for sheer enjoyment (but with only 1 season, sadly).

Fixed that for ya!  ;D
Title: Re: NFLX - Netflix
Post by: Liberty on August 05, 2013, 01:59:20 PM
Quote
My trinity for quality TV is probably Firefly -- Firefly -- Firefly, with Firefly somewhere on the side for sheer enjoyment (but with only 1 season, sadly).

Fixed that for ya!  ;D

If you are into short-lived well-written series, check out Freaks and Geeks  ;)
Title: Re: NFLX - Netflix
Post by: Kiltacular on August 06, 2013, 04:18:01 AM
These are some good shows you guys mention:  The Wire, Six feet under and The Sopranos were all really well written and stayed good.  Freaks and geeks was a great little series and got Apatow noticed. It would have had a long run if made by him today. 

Based on these comments from you all, I should stop typing and start watching firefly immediately.  I haven't seen it.
Title: Re: NFLX - Netflix
Post by: tombgrt on August 30, 2013, 01:54:39 PM
Thanks for the recommendation Liberty. Saw the first episode and it looks promising. House of Cards was brilliant, hope they keep it up because I'll need some replacement for Breaking Bad next year.

The amount of high quality shows has really gone upwards these last few years. Homeland, Hannibal, Boardwalk empire, Game of Thrones, House of Cards, ... There have of course been plenty of good shows these last 10-15 years but the amount has been increasing rapidly imo. I just looked at an overview of all the shows I watched, mostly during college. 51! And that's not including fluff like Lost and Prison Break! :o

Glad you like it. Like most series, it takes maybe 3-4 episode to reach cruising speed (time to introduce characters, settings, etc), so if you like it from the start, it should only improve for you as it progresses.

I agree about quality TV. I've almost stopped watching movies for my "looking at a screen" entertainment.

If you're looking for more quality TV, check out the first two seasons of Justified (for some reason the quality of the writing goes down a lot in season 3, and I stopped watching around the 5th episode in that season). Similar thing happened with Dexter; the first two seasons were excellent (possibly because based on the original book), and after that the tone changes and writing quality goes downhill.

My trinity for quality TV is probably The Wire -- The Sopranos -- Six Feet Under, with Firefly somewhere on the side for sheer enjoyment (but with only 1 season, sadly).

Finished with Orange is the new black, watched it with my gf. Great show! There is some light drama but it's mostly lighthearted. Lot's of great humor as well. I'd call it "fresh".

Six Feet Under was the best drama series I ever watched. :) Haven't even seen Firefly or Justified so I guess I should give it a try asap. Is Firefly a bit like Battlestar Galactica? Or are they not comparable other than the setting? Looks old school.

Dexter is horrible now but I'm still watching just because I know it's almost over.. >>
Title: Re: NFLX - Netflix
Post by: LanceSanity on August 30, 2013, 04:05:44 PM
Firefly is a futuristic Western, like Cowboy Bebop. In both shows, the group of characters travels in space, doing odd jobs just to get by.

I watched a few episodes of Dexter season 8. This is the first season I seriously dislike. I just read the spoilers to save myself the disappointment and time.
Title: Re: NFLX - Netflix
Post by: Liberty on August 30, 2013, 08:44:40 PM
Firefly is not really like BSG, though BSG was a little influenced by Firefly (especially noticeable in the 'camera work' out in space).

Firefly doesn't sound that interesting on paper; it's the quality of the writing and the ensemble cast that makes it so enjoyable. So trying to interest you by describing the setting or plot is a bit pointless.

I need to re-watch Six Feet Under someday... If you haven't seen The Wire and The Sopranos, these are shows on that level IMO.
Title: Re: NFLX - Netflix
Post by: Kiltacular on September 16, 2013, 09:04:50 PM
Breaking Bad:

http://www.forbes.com/sites/allenstjohn/2013/09/16/why-breaking-bad-is-the-best-show-ever-and-why-that-matters/

Title: Re: NFLX - Netflix
Post by: rkbabang on September 17, 2013, 06:40:24 AM
Breaking Bad:

http://www.forbes.com/sites/allenstjohn/2013/09/16/why-breaking-bad-is-the-best-show-ever-and-why-that-matters/

I just started watching Breaking Bad about 2 weeks ago. I'm half way through season 3 now and I'm hooked quite bad. I usually don't watch TV much, but I haven't read a book at all in the last 2 weeks I've been watching a few episodes per night and a bunch on the weekends.   I've heard so many people go on about it over the years, I can't believe I haven't given it a try until now.  If you haven't seen it, start at the beginning and start watching it.  If it isn't the best show ever, I'm not sure what is.  I loved the Sopranos, Dexter, Boardwalk Empire, but none of them got me hooked like this.  The first season of 24 had me hooked pretty bad, but that was only one season, the show went way down hill after 9/11 when it went all war on terror.  Breaking Bad never gets stale or slows down.
Title: Re: NFLX - Netflix
Post by: Yours Truly on September 17, 2013, 10:05:58 AM
Breaking Bad:

http://www.forbes.com/sites/allenstjohn/2013/09/16/why-breaking-bad-is-the-best-show-ever-and-why-that-matters/

I just started watching Breaking Bad about 2 weeks ago. I'm half way through season 3 now and I'm hooked quite bad. I usually don't watch TV much, but I haven't read a book at all in the last 2 weeks I've been watching a few episodes per night and a bunch on the weekends.   I've heard so many people go on about it over the years, I can't believe I haven't given it a try until now.  If you haven't seen it, start at the beginning and start watching it.  If it isn't the best show ever, I'm not sure what is.  I loved the Sopranos, Dexter, Boardwalk Empire, but none of them got me hooked like this.  The first season of 24 had me hooked pretty bad, but that was only one season, the show went way down hill after 9/11 when it went all war on terror.  Breaking Bad never gets stale or slows down.

Agreed.

- Breaking Bad
- Mad Men
- Game of Thrones

Today's top 3 in TV imo

Notable mentions:
- Homeland
- Walking Dead
- Boardwalk Empire
Title: Re: NFLX - Netflix
Post by: DCG on October 21, 2013, 01:02:57 PM
wow..up $40 after hours, trading near $400.
Title: Re: NFLX - Netflix
Post by: siddharth18 on October 21, 2013, 01:20:26 PM
Holy ****

Carl Icahn sitting on $2,000,000,000 unrealized, long term gain?
Title: Re: NFLX - Netflix
Post by: DCG on October 21, 2013, 01:36:21 PM
Over $1B in revenue in the quarter, but only $32m of income out of it.
Title: Re: NFLX - Netflix
Post by: rkbabang on October 21, 2013, 01:38:04 PM
I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.

^^^ This is turning out to be the worst "sold too early" mistake I've ever made.
Title: Re: NFLX - Netflix
Post by: enoch01 on October 21, 2013, 01:43:38 PM
I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.

^^^ This is turning out to be the worst "sold too early" mistake I've ever made.

Why did you buy them, and why did you sell them?  Just curious about your process.  No worries if it's too painful to answer!
Title: Re: NFLX - Netflix
Post by: siddharth18 on October 21, 2013, 01:44:51 PM
In a euphoric market, the distinction between luck and skill becomes so clouded.


It's fun observing how crowds behave/think in such a market: http://finance.yahoo.com/mb/nflx/ (http://finance.yahoo.com/mb/nflx/)
Title: Re: NFLX - Netflix
Post by: rkbabang on October 21, 2013, 04:24:12 PM
I had a few January 2014 calls 9 of the $90 and one contract of the $140, which I recently (less than a month ago) sold for just above my cost basis breaking even for about $8K total.  Those calls would be worth over $56K right now.   I shouldn't have even looked.

^^^ This is turning out to be the worst "sold too early" mistake I've ever made.

Why did you buy them, and why did you sell them?  Just curious about your process.  No worries if it's too painful to answer!

I bought them for all the reasons that made the stock go up, it was a tiny position and I thought a safe bet from where the stock was trading at the time. I knew subsciber growth was good, the whole flixter thing was immaterial, and they were going to start producing their own shows.   I sold for two reasons.  One, I was tired of waiting and started to doubt myself.  And 2 I had something else I wanted to invest in.  I was ultimately correct, but too early, and not patient.
Title: Re: NFLX - Netflix
Post by: enoch01 on October 21, 2013, 05:11:37 PM
Thanks for the response, rkbabang.
Title: Re: NFLX - Netflix
Post by: bmichaud on October 22, 2013, 07:14:19 AM
Given the way NFLX is acting right now in response to "blow-out" earnings, it's likely a screaming short. I just don't have the cajones....
Title: Re: NFLX - Netflix
Post by: DCG on October 22, 2013, 09:19:55 AM
Reed Hastings even said there's way too much euphoria in NFLX stock.
Title: Re: NFLX - Netflix
Post by: compoundinglife on October 22, 2013, 03:27:04 PM
Uncle Carl has trimmed down approximately 50 percent:

http://www.bloomberg.com/video/carl-icahn-reports-sale-of-2-99m-shares-of-netflix-iP7E9RdSScG7X~Ef4qYJ2g.html
Title: Re: NFLX - Netflix
Post by: bmichaud on October 23, 2013, 06:54:11 AM
Interesting disagreement between Carl and his son:

http://business.financialpost.com/2013/10/23/netflix-inc-stock-sale-nets-carl-icahn-about-800-million-and-clash-with-his-son/?__lsa=e7c1-beef
Title: Re: NFLX - Netflix
Post by: rogermunibond on October 23, 2013, 03:52:10 PM
Junior could always just ask for his inheritance early in NFLX shares.  ;D
Title: Re: NFLX - Netflix
Post by: fareastwarriors on November 07, 2013, 10:41:34 AM
http://www.bloomberg.com/news/2013-11-07/disney-to-create-four-series-for-netflix-using-marvel-characters.html (http://www.bloomberg.com/news/2013-11-07/disney-to-create-four-series-for-netflix-using-marvel-characters.html)


Disney to Create Four Series for Netflix Using Marvel Characters
Title: Re: NFLX - Netflix
Post by: tombgrt on December 15, 2013, 02:43:57 AM
http://www.youtube.com/watch?v=P0ukYf_xvgc

Relevant must watch. What a brilliant guy (and great actor!).

Now if you'll excuse me, I have to binge watch The Office S08 on my free Sunday.  ;)
Title: Re: NFLX - Netflix
Post by: mikazo on January 02, 2014, 02:41:54 PM
Interesting article on Netflix's genre/recommendation algorithm:

http://www.theatlantic.com/technology/archive/2014/01/how-netflix-reverse-engineered-hollywood/282679/ (http://www.theatlantic.com/technology/archive/2014/01/how-netflix-reverse-engineered-hollywood/282679/)
Title: Re: NFLX - Netflix
Post by: nikhil25 on January 07, 2014, 06:39:08 AM
http://www.fastcompany.com/3024158/netflix-the-red-menace
Interesting Piece.
Title: Re: NFLX - Netflix
Post by: jay21 on January 27, 2014, 07:22:54 AM
I'm just starting to dig into cable and NFLX and content are brought up all the time.  In terms of NFLX, something is wrong here.  Their product seems to be very underpriced and the content providers are probably selling content to cheaply.

"The video-on-demand service charges $7.99/month per subscriber, and pays somewhere in the neighborhood of $6/month per viewer for content, plus any and all expenses."

"In the third quarter, Comcast (NASDAQ:CMCSA) paid out $35/month per subscriber in content costs. This money went to content providers like Time Warner (NYSE:TWX), whose network division includes HBO and basic cable channels like TBS and TNT. This $35/month is supplemented by advertising, which can account for a third of total revenue -- or more, in the case of a high-profile channel like ESPN -- putting us at $50/month or more in total revenue per subscriber. The cost of operating Time Warnerís network was 61% of revenue last quarter; Disney (NYSE:DIS) and Twenty-First Century Fox (NASDAQ:FOXA) paid out even higher percentages. In other words, we're looking at a minimum of $30/month per subscriber to run one of these cable networks -- a ballpark figure, but one that's nearly four times the price of a Netflix subscription."

I know that's not an apples to apples comparison because NFLX content is not the same quality of cable TV (in terms of newness, live sports, etc.), but it still strikes me as mis-priced.  This is probably not news to anyone, but I find it interesting.
Title: Re: NFLX - Netflix
Post by: rkbabang on January 27, 2014, 07:34:44 AM
I'm just starting to dig into cable and NFLX and content are brought up all the time.  In terms of NFLX, something is wrong here.  Their product seems to be very underpriced and the content providers are probably selling content to cheaply.

"The video-on-demand service charges $7.99/month per subscriber, and pays somewhere in the neighborhood of $6/month per viewer for content, plus any and all expenses."

"In the third quarter, Comcast (NASDAQ:CMCSA) paid out $35/month per subscriber in content costs. This money went to content providers like Time Warner (NYSE:TWX), whose network division includes HBO and basic cable channels like TBS and TNT. This $35/month is supplemented by advertising, which can account for a third of total revenue -- or more, in the case of a high-profile channel like ESPN -- putting us at $50/month or more in total revenue per subscriber. The cost of operating Time Warnerís network was 61% of revenue last quarter; Disney (NYSE:DIS) and Twenty-First Century Fox (NASDAQ:FOXA) paid out even higher percentages. In other words, we're looking at a minimum of $30/month per subscriber to run one of these cable networks -- a ballpark figure, but one that's nearly four times the price of a Netflix subscription."

I know that's not an apples to apples comparison because NFLX content is not the same quality of cable TV (in terms of newness, live sports, etc.), but it still strikes me as mis-priced.  This is probably not news to anyone, but I find it interesting.


What I find mispriced is what Comcast is paying the various content providers.  I've been paying for cable since I moved out of my parents house 22 years ago, and in those 22 years I don't think any of my televisions has ever been tuned to ESPN for even 2 minutes.  No one in my house watches sports of any type, yet my cable company has to pay ESPN on my behalf and I am not offered an option of not subscribing to ESPN.  This needs to change, the free ride these networks are getting on the backs of people who don't have any desire to view their content or subscribe to their channels is what is severely mispriced in the current market place.  You should only pay for what you want, and the content creators should only get paid for serving the people who want to pay for what they are offering.  Since anyone with an internet connection can access Netflix, while the cable companies have a government enforced monopoly, I'd say that the Netflix model is closer to what a free market in entertainment would be, rather than the highly subsidized and government enforced and protected cable TV model.
Title: Re: NFLX - Netflix
Post by: Liberty on January 27, 2014, 08:44:34 AM
What I find mispriced is what Comcast is paying the various content providers.  I've been paying for cable since I moved out of my parents house 22 years ago, and in those 22 years I don't think any of my televisions has ever been tuned to ESPN for even 2 minutes.  No one in my house watches sports of any type, yet my cable company has to pay ESPN on my behalf and I am not offered an option of not subscribing to ESPN.  This needs to change, the free ride these networks are getting on the backs of people who don't have any desire to view their content or subscribe to their channels is what is severely mispriced in the current market place.  You should only pay for what you want, and the content creators should only get paid for serving the people who want to pay for what they are offering.  Since anyone with an internet connection can access Netflix, while the cable companies have a government enforced monopoly, I'd say that the Netflix model is closer to what a free market in entertainment would be, rather than the highly subsidized and government enforced and protected cable TV model.

That's basically Malone's theory about unbundling. It used to work because people didn't have a choice, and the technology didn't make it easy to have a choice anyway. But now, it seems inevitable that it'll happen at some point. And because more and more content will go over the top, through the IP connection, those who are able to provide fast internet at the lowest cost will be well positioned (ie. cable companies should be able to go all the way up to gigabit speeds over time with fairly minimal capex, especially once they go all-digital and free up tons of bandwidth on their pipes that is currently being used by analog signals -- telecoms won't be able to go that fast with DSL, and satellite players don't have the bi-directional infrastructure).
Title: Re: NFLX - Netflix
Post by: jay21 on February 06, 2014, 05:51:31 AM
http://blogs.ft.com/tech-blog/2014/02/old-media-v-new-media-hbo-and-netflix-battle-it-out/

Time Warner released separate financial figures for HBO for the first time on Wednesday, prompting comparisons with Netflix which famously overtook HBO in US subscribers in November.

Yet Jeff Bewkes, chief executive of Time Warner, downplayed any such rivalry between HBO and video streaming companies like Netflix, Amazon and Hulu. He said that the subscriptions are complementary. ďIf you look at Netflix, viewing is higher in HBO homes, and HBO viewing is higher in Netflix homes,Ē he said. ďSo those are add ons.Ē

He noted that the network won 27 primetime Emmy awards, the most of any network for the twelfth year in a row and with Cinemax added 2m US subscribers in 2013, the biggest increase in 17 years. ďHBO remains in a league of its own.Ē
Title: Re: NFLX - Netflix
Post by: jay21 on February 06, 2014, 06:04:08 AM
What I find mispriced is what Comcast is paying the various content providers.  I've been paying for cable since I moved out of my parents house 22 years ago, and in those 22 years I don't think any of my televisions has ever been tuned to ESPN for even 2 minutes.  No one in my house watches sports of any type, yet my cable company has to pay ESPN on my behalf and I am not offered an option of not subscribing to ESPN.  This needs to change, the free ride these networks are getting on the backs of people who don't have any desire to view their content or subscribe to their channels is what is severely mispriced in the current market place.  You should only pay for what you want, and the content creators should only get paid for serving the people who want to pay for what they are offering.  Since anyone with an internet connection can access Netflix, while the cable companies have a government enforced monopoly, I'd say that the Netflix model is closer to what a free market in entertainment would be, rather than the highly subsidized and government enforced and protected cable TV model.

This may be the way things are in the future but I wonder how things will play out.

ESPN is probably a good example to think about. It is a very expensive channel, but watched by many so I think this would absorb a lot of the consumers cable budget.  Will the consumer then cut out something like National Geography if they do not watch that much of it.  I would expect that viewership of the non-premium channels would be drastically reduced and some of them would be canceled.  I could see the potential for much less channels in the future.

Or maybe the concept of a tv channel will completely disappear and things will operate more like a pay per view basis/netflix streaming basis?  I would log in to my TV and pick what I wanted to watch and I would pay for it (this seems to be the fairest method based on what you described).  I can't help but think about some of the psychological effects of having to choose from an enormous amount of choices and seeing the price of every one of those choices.  You will also experience some pain every time you pay for one show.
Title: Re: NFLX - Netflix
Post by: rkbabang on February 06, 2014, 07:43:13 AM
What I find mispriced is what Comcast is paying the various content providers.  I've been paying for cable since I moved out of my parents house 22 years ago, and in those 22 years I don't think any of my televisions has ever been tuned to ESPN for even 2 minutes.  No one in my house watches sports of any type, yet my cable company has to pay ESPN on my behalf and I am not offered an option of not subscribing to ESPN.  This needs to change, the free ride these networks are getting on the backs of people who don't have any desire to view their content or subscribe to their channels is what is severely mispriced in the current market place.  You should only pay for what you want, and the content creators should only get paid for serving the people who want to pay for what they are offering.  Since anyone with an internet connection can access Netflix, while the cable companies have a government enforced monopoly, I'd say that the Netflix model is closer to what a free market in entertainment would be, rather than the highly subsidized and government enforced and protected cable TV model.

This may be the way things are in the future but I wonder how things will play out.

ESPN is probably a good example to think about. It is a very expensive channel, but watched by many so I think this would absorb a lot of the consumers cable budget.  Will the consumer then cut out something like National Geography if they do not watch that much of it.  I would expect that viewership of the non-premium channels would be drastically reduced and some of them would be canceled.  I could see the potential for much less channels in the future.

Or maybe the concept of a tv channel will completely disappear and things will operate more like a pay per view basis/netflix streaming basis?  I would log in to my TV and pick what I wanted to watch and I would pay for it (this seems to be the fairest method based on what you described).  I can't help but think about some of the psychological effects of having to choose from an enormous amount of choices and seeing the price of every one of those choices.  You will also experience some pain every time you pay for one show.

I agree, pay per view is not going to work very well.  I see the Netflix model as the medium term future of TV.  Maybe there will be many streaming companies that offer different types of programing and have deals with different content producers.  I definitely don't see the current concept of a TV channel lasting very long.    ESPN could be a streaming service with multiple add-on options, maybe you want to subscribe to Baseball and not Hockey, for instance.   In the end we could all be subscribing to a bunch of $10-$20/month services and paying as much per month in total as we pay now for cable, but at least we will only be paying for the services which have something that we what we want to watch.  If Netflix started carrying the NFL live games and upped its price to $100/month, I'd cancel immediately.
Title: Re: NFLX - Netflix
Post by: brker_guy on May 29, 2014, 04:32:45 PM
Why can't the FCC get their acts together and have Net Neutrality by now is beyond me?  Just check out this arrogance by Brian Roberts at Comcast:


Quote
Comcast CEO Brian Roberts: Itís time to pay the postman. (Just FYI: I am the new postman)

http://gigaom.com/2014/05/28/comcast-ceo-brian-roberts-its-time-to-pay-the-postman-just-fyi-i-am-the-new-postman/

Quote
If Comcastís Brian Roberts thinks heís the postman, Netflixís Reed Hastings thinks heís the taxman
https://gigaom.com/2014/05/29/if-comcasts-brian-roberts-thinks-hes-the-postman-netflixs-reed-hastings-thinks-hes-the-taxman/
Title: Re: NFLX - Netflix
Post by: rkbabang on October 02, 2014, 07:25:38 AM
Netflix making waves.

Netflix to Canada: Take Your Busy-Body Threat and Shove It (http://blog.panampost.com/andrew-woodbury/2014/09/23/netflix-to-canada-take-your-busy-body-threat-and-shove-it/)

Netflix Announces First Original Movie, Crouching Tiger, Hidden Dragon: The Green Legend To Premiere Simultaneously On Netflix And In Select Global IMAX Theaters (http://seekingalpha.com/pr/11173575-netflix-announces-first-original-movie-crouching-tiger-hidden-dragon-the-green-legend-to-premiere-simultaneously-on-netflix-and-in-select-global-imax-theaters)

With Four New Adam Sandler Films, Netflix Takes Aim at Theaters (http://www.nytimes.com/2014/10/02/business/media/with-four-new-adam-sandler-films-netflix-takes-aim-at-theaters.html)

Survey confirms viewership pressure on TV networks (http://seekingalpha.com/news/2012105-survey-confirms-viewership-pressure-on-tv-networks?uprof=44)
Title: Re: NFLX - Netflix
Post by: Kiltacular on October 02, 2014, 05:57:55 PM
Netflix making waves.

Netflix to Canada: Take Your Busy-Body Threat and Shove It (http://blog.panampost.com/andrew-woodbury/2014/09/23/netflix-to-canada-take-your-busy-body-threat-and-shove-it/)

Netflix Announces First Original Movie, Crouching Tiger, Hidden Dragon: The Green Legend To Premiere Simultaneously On Netflix And In Select Global IMAX Theaters (http://seekingalpha.com/pr/11173575-netflix-announces-first-original-movie-crouching-tiger-hidden-dragon-the-green-legend-to-premiere-simultaneously-on-netflix-and-in-select-global-imax-theaters)

With Four New Adam Sandler Films, Netflix Takes Aim at Theaters (http://www.nytimes.com/2014/10/02/business/media/with-four-new-adam-sandler-films-netflix-takes-aim-at-theaters.html)

Survey confirms viewership pressure on TV networks (http://seekingalpha.com/news/2012105-survey-confirms-viewership-pressure-on-tv-networks?uprof=44)

Netflix's original content is going from very, very good to outstanding. 

Check out "Peaky Blinders"...Cillian Murphy is cool.  Annabelle Wallis weakens the knees every time she's on screen.  Helen McCrory has incredible presence.  The storyline, acting, cinematography, etc. are all top notch.   

This is an awesome series...season 2 coming in Nov.
Title: Re: NFLX - Netflix
Post by: rkbabang on October 03, 2014, 05:48:19 AM
Netflix making waves.

Netflix to Canada: Take Your Busy-Body Threat and Shove It (http://blog.panampost.com/andrew-woodbury/2014/09/23/netflix-to-canada-take-your-busy-body-threat-and-shove-it/)

Netflix Announces First Original Movie, Crouching Tiger, Hidden Dragon: The Green Legend To Premiere Simultaneously On Netflix And In Select Global IMAX Theaters (http://seekingalpha.com/pr/11173575-netflix-announces-first-original-movie-crouching-tiger-hidden-dragon-the-green-legend-to-premiere-simultaneously-on-netflix-and-in-select-global-imax-theaters)

With Four New Adam Sandler Films, Netflix Takes Aim at Theaters (http://www.nytimes.com/2014/10/02/business/media/with-four-new-adam-sandler-films-netflix-takes-aim-at-theaters.html)

Survey confirms viewership pressure on TV networks (http://seekingalpha.com/news/2012105-survey-confirms-viewership-pressure-on-tv-networks?uprof=44)

Netflix's original content is going from very, very good to outstanding. 

Check out "Peaky Blinders"...Cillian Murphy is cool.  Annabelle Wallis weakens the knees every time she's on screen.  Helen McCrory has incredible presence.  The storyline, acting, cinematography, etc. are all top notch.   

This is an awesome series...season 2 coming in Nov.

Thanks.  I hadn't heard of that one.  I'll check it out.
Title: Re: NFLX - Netflix
Post by: merkhet on October 15, 2014, 01:41:13 PM
Wow. This is a bad day to miss on subscriber numbers. Down over 25% after hours.

(Also doesn't help that HBO decided to launch its own standalone streaming service today.)
Title: Re: NFLX - Netflix
Post by: valueyoda on October 15, 2014, 03:14:57 PM
Even though Netflix is the antithesis of what value investors typically look for, the stock starts to become reasonably attractive from a very long term perspective after today's after market 30% decline. Investors ignore the long term pricing power of the few incumbent players in the streaming market. I personally think that Netflix will garner a market leading share in most developed nations within a decade with potentially 80-100 mln subscribers. Netflix's ability to increase prices is present due to an improved catalogue and low pricing to other entertainment alternatives. Let's say that Netflix raises prices by $1 on monthly basis in a few years, when it has 80mln users, then it improves its annual contribution margin by $960mln, which is equivalent to almost $10bn in market value if you put a 10x multiple on it.
Title: Re: NFLX - Netflix
Post by: fareastwarriors on October 17, 2014, 09:56:42 AM
Billionaire Investor Mark Cuban Says Heís Buying Netflix Shares


http://www.bloomberg.com/news/2014-10-17/billionaire-investor-mark-cuban-says-he-s-buying-netflix-shares.html (http://www.bloomberg.com/news/2014-10-17/billionaire-investor-mark-cuban-says-he-s-buying-netflix-shares.html)
Title: Re: NFLX - Netflix
Post by: eskebranded on October 19, 2014, 05:35:12 PM
NFLX is starting to look interesting, though a bit expensive for my taste. FY15 estimates have come in significantly over the past 12 months, $7.15 to $4.82. Could there me more room to the downside? I would probably bet so. The firm is in a unique period as it shifts to a content creator from a just a content streamer. The company has had some early success, and is pursuing this with full force. I think this will continue to be an interesting period for NFLX as spending on original content is expected to rise steeply and eat into its margins going forth, coupled with their international expansion efforts this could get interesting. However, from a competitive standpoint I think that NFLX is doing what is necessary to differentiate its seemingly moat-less business from the onslaught of competitors present and to come.
Title: Re: NFLX - Netflix
Post by: ItsAValueTrap on October 19, 2014, 08:00:26 PM
NFLX is starting to look interesting, though a bit expensive for my taste. FY15 estimates have come in significantly over the past 12 months, $7.15 to $4.82. Could there me more room to the downside? I would probably bet so. The firm is in a unique period as it shifts to a content creator from a just a content streamer. The company has had some early success, and is pursuing this with full force. I think this will continue to be an interesting period for NFLX as spending on original content is expected to rise steeply and eat into its margins going forth, coupled with their international expansion efforts this could get interesting. However, from a competitive standpoint I think that NFLX is doing what is necessary to differentiate its seemingly moat-less business from the onslaught of competitors present and to come.
re: original programming
I believe they're paying for licenses of original content.

The company already has a moat.  If you look at the history of broadcast networks (CBS ABC NBC) and top cable channels, you can see that the players with scale have a moat.  They're hard to displace.
Title: Re: NFLX - Netflix
Post by: WeiChiLoh on October 20, 2014, 05:07:12 AM
Seems to be very similar to AMZN historically. If they raise price by $2..$2 x 50m subscribers x 12 x market multiple (18x) = $21.6b, that already more than justify the current market capitalization. Dont this mean you get the additional pricing upside and any subscribers growth for free? Seems like a great opportunity.
Title: Re: NFLX - Netflix
Post by: WeiChiLoh on October 20, 2014, 05:10:46 AM
Personally..I think NFLX can easily raise price by 5% annually (real term, that is an 40c per month) and still achieve a very impressive subscriber growth rate.
Title: Re: NFLX - Netflix
Post by: Schwab711 on October 20, 2014, 04:09:02 PM
Seems to be very similar to AMZN historically. If they raise price by $2..$2 x 50m subscribers x 12 x market multiple (18x) = $21.6b, that already more than justify the current market capitalization. Dont this mean you get the additional pricing upside and any subscribers growth for free? Seems like a great opportunity.

I think this is a very interesting way to look at Netflix. Sadly they do not own their 'original content' but they have exclusive license for some significant period (10 or 15 years?). Only thing that makes me nervous is guessing how consumers' money will be spent as cord cutting continues and reaches critical mass. The question is, how much will be spent on video content and what will the industry look like? I worry video content spending will drop dramatically similar to the news and Netflix may win a much smaller pot than they first thought.
Title: Re: NFLX - Netflix
Post by: WeiChiLoh on October 20, 2014, 04:50:51 PM
Seems to be very similar to AMZN historically. If they raise price by $2..$2 x 50m subscribers x 12 x market multiple (18x) = $21.6b, that already more than justify the current market capitalization. Dont this mean you get the additional pricing upside and any subscribers growth for free? Seems like a great opportunity.

I think this is a very interesting way to look at Netflix. Sadly they do not own their 'original content' but they have exclusive license for some significant period (10 or 15 years?). Only thing that makes me nervous is guessing how consumers' money will be spent as cord cutting continues and reaches critical mass. The question is, how much will be spent on video content and what will the industry look like? I worry video content spending will drop dramatically similar to the news and Netflix may win a much smaller pot than they first thought.

Agreed. Although I can see why binge watching Tv series or movies would have a more lasting moat as compared to News... I think what is impt here is to identify NFLX TAM and try to guess how much of TAM can they capture. After which determining the value in which consumers are willing to pay as compared to current prices (some call it pricing power...) and then get to the fair value of the company and pay 20/25cent on the dollar.
Title: Re: NFLX - Netflix
Post by: ItsAValueTrap on October 20, 2014, 05:49:59 PM
1- Netflix might eventually get to the point of $15-20/month subscriptions with substantially better content.  With higher scale, their margins will go up and they will be able to afford better programming.

They will likely apply their model globally.

After that, Reed Hastings might find new opportunities to get into... e.g. niche premium bundles.

2- I don't particularly see Netflix as being that different than HBO, broadcast networks, cable channels, etc.  The dynamics are largely the same.  Scale is still incredibly important.

IMO history will repeat itself.  Netflix will become disturbingly profitable once their economies of scale really kick in.
Title: Re: NFLX - Netflix
Post by: tombgrt on October 25, 2014, 05:08:38 PM
Made a Netflix account yesterday and I'm already hooked. It has been out here in Belgium for only a month and I haven't found many flaws yet, very nice. By changing the settings (both dubbing and subtitles) I can easily practice my French as well. :)

The content, HD quality and ease of use make it easily worth the 9 euro's per month compared to downloading everything for free (what I was doing before Netflix). I'd be willing to pay almost double the current price already. I'm sure plenty of people would pay even more if they can add in some extra features.

Too bad the stock is so expensive. Scale advantage is going to make this a wonderful business. I don't see how content packs from cable companies, especially in smaller countries like Belgium, can compete with them.
Title: Re: NFLX - Netflix
Post by: eskebranded on October 26, 2014, 06:31:02 PM
NFLX is starting to look interesting, though a bit expensive for my taste. FY15 estimates have come in significantly over the past 12 months, $7.15 to $4.82. Could there me more room to the downside? I would probably bet so. The firm is in a unique period as it shifts to a content creator from a just a content streamer. The company has had some early success, and is pursuing this with full force. I think this will continue to be an interesting period for NFLX as spending on original content is expected to rise steeply and eat into its margins going forth, coupled with their international expansion efforts this could get interesting. However, from a competitive standpoint I think that NFLX is doing what is necessary to differentiate its seemingly moat-less business from the onslaught of competitors present and to come.
re: original programming
I believe they're paying for licenses of original content.

The company already has a moat.  If you look at the history of broadcast networks (CBS ABC NBC) and top cable channels, you can see that the players with scale have a moat.  They're hard to displace.

I agree, however my concern is the durability of their positioning. Like all things time will tell.
Do you think NFLX is attractive at these levels?
Title: Re: NFLX - Netflix
Post by: ItsAValueTrap on October 26, 2014, 07:57:45 PM
Do you think NFLX is attractive at these levels?

IMO it's fairly valued or somewhat expensive.  But it depends on your time frame.  If you are willing to wait 20-30 years, then Reed Hastings might create a lot of value and significantly grow the underlying business.

Example:
Netflix's current market cap is 23.2B.  If you assume that Netflix will ultimately trade at a 20X multiple, then a 23.2B market cap valuation needs to be supported by earnings of $1,160M.  Peak profitability was YE2011 with profits of $226M.  Doubling its subscriber base and more than doubling margins would fill the gap between $226M and $1,160M (5.13X).  I think both are doable.

*Ignoring the time value of money and assuming at discount rate of 0%.

There's not a lot of upside unless you are willing to wait like 10 years.
Title: Re: NFLX - Netflix
Post by: yadayada on October 27, 2014, 08:04:30 AM
I love how manic the market is on this one.
2011: 300$ THE MOAT IS MASSIVE ON THIS ONE
2012: 60$ oh well I guess not
2014: 400$+ MOAT IS BACK AGAIN BUYBUYBUY

Makes me think you should just wait this one out and hope the market gets panicky again.
Title: Re: NFLX - Netflix
Post by: ccplz on December 16, 2014, 04:40:38 PM
Quote
Doubling its subscriber base and more than doubling margins would fill the gap between $226M and $1,160M (5.13X).  I think both are doable.

Doubling subscriber base is definitely doable, but how do you suppose NFLX can double it's margins?

And that's not even including maintenance capex etc.
Title: Re: NFLX - Netflix
Post by: JAllen on December 17, 2014, 12:06:53 PM
What is maintenance capex for NFLX?
Title: Re: NFLX - Netflix
Post by: saltybit on February 20, 2015, 02:58:12 PM
Netflix: Long term view
http://ir.netflix.com/long-term-view.cfm
Title: Re: NFLX - Netflix
Post by: frommi on January 20, 2016, 10:18:28 AM
Bought a bigger position in NFLX today. I really like the content they create and their global expansion is just starting. Based on my napkin math they should be able to double the subscriber base in 3-4 years and every additional customer $ goes directly to the bottom line. Even if you believe that they don`t generate profits today, (which i don`t) that means 8 billion $ earnings in 2020. Put a conservative multiple of 15x on it and we are at a 120 billion marketcap company in 4 years. Thats nearly a triple from here. Any flaws in my thinking?
Title: Re: NFLX - Netflix
Post by: Grey512 on January 20, 2016, 10:23:35 AM
I did similar math. No flaws that I can see. The risks here are:

1) NFLX will need to tap the capital markets a few times in the coming 18 months. That makes it a little vulnerable. This is not a hyper-growth company that can bootstrap itself. This is a hyper-growth company that needs shovelfuls of cash for a few more years.
2) Reed Hastings may get run over by a bus.
3) AMZN has deeper pockets and is increasingly going after NFLX. Did you watch the Golden Globes recently? Bezos made sure to attend; big triumph for them (Mozart in the Jungle; Mr Robot not technically a full AMZN production but it's seen that way, etc).

Long term, domination looks almost inevitable. But it will be a tough fight a very volatile ride in the share price until we get there.
Title: Re: NFLX - Netflix
Post by: JayGatsby on January 20, 2016, 10:24:04 AM
Bought a bigger position in NFLX today. I really like the content they create and their global expansion is just starting. Based on my napkin math they should be able to double the subscriber base in 3-4 years and every additional customer $ goes directly to the bottom line. Even if you believe that they don`t generate profits today, (which i don`t) that means 8 billion $ earnings in 2020. Put a conservative multiple of 15x on it and we are at a 120 billion marketcap company in 4 years. Thats nearly a triple from here. Any flaws in my thinking?
A lot of their expenses is content licensing. As subscribers go up content costs will go up, so not direct to the bottom line. There's also a risk that as the industry becomes more mature, prices are bid up and a higher % of revenue goes to the content owner. NFLX will also have to create some original content tailored to new markets. I don't really have a strong view on the value, but that's the bear case.
Title: Re: NFLX - Netflix
Post by: frommi on January 20, 2016, 11:03:32 AM
Bought a bigger position in NFLX today. I really like the content they create and their global expansion is just starting. Based on my napkin math they should be able to double the subscriber base in 3-4 years and every additional customer $ goes directly to the bottom line. Even if you believe that they don`t generate profits today, (which i don`t) that means 8 billion $ earnings in 2020. Put a conservative multiple of 15x on it and we are at a 120 billion marketcap company in 4 years. Thats nearly a triple from here. Any flaws in my thinking?
A lot of their expenses is content licensing. As subscribers go up content costs will go up, so not direct to the bottom line. There's also a risk that as the industry becomes more mature, prices are bid up and a higher % of revenue goes to the content owner. NFLX will also have to create some original content tailored to new markets. I don't really have a strong view on the value, but that's the bear case.

I watched the Marvel and DC comic series (Jessica Jones,Daredevil,Gotham) and i am more than impressed. That is blockbuster material, 10-15 hours of it per serie. That is all Netflix`s own content, which is very efficiently produced without expensive actors. And these are just 3 series, they are creating more content than any other company in the world at the moment, if i recall it correctly.
Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 11:25:33 AM
I have no position in NFLX apart 0.0001% of my portfolio that my wife bought when NFLX was 10x lower. So there ... a ten bagger that I can't even brag about and that made almost zero influence on my returns or wealth. ;) Sad story. ;)

I would come to this from opposite direction. IMO there's way too many content companies and way too much content (I own shares in STRZA and DISCA plus LGF through them). IMHO, this is what NFLX can still exploit, is still exploiting and will continue exploiting until there is a massive consolidation and cuts in content companies. I.e. content companies still sell their content to NFLX for peanuts because they mostly have to: if they don't sell, competitors will; if they don't sell, they get zero for that content instead of NFLX peanuts, etc. Of course, some of them don't sell and froth from their collective mouths (see DISCA), but overall NFLX still kinda rules.

There is a possibility that content consolidation and cuts won't happen: there are always rich people who want to produce content and bask in the glow, so the economics of content may be pushed down by that.

I am much more skeptical about NFLX-made-content. Maybe they gonna be the golden boys of content. Looking at the history of film making, likely they won't. Studios/content companies usually drift from hits to mediocrity and back. Disney might be the only exception (some might argue that HBO are too, but I don't think so). Netflix has one weapon against other content companies - instant feedback how many viewers view something, how many stop watching, etc. - but they are not really using it so far. Most their deals (AFAIK) are old-fashioned "season" deals that make no sense for them. They could kill series mid-season based on feedback instead of being forced to make the whole season, but they don't seem to structure the deals that way.

Now, going to anecdotal: we have NFLX streaming and NFLX DVD. I wanted to cut NFLX streaming, since we have Amazon Prime. I got overruled. So I guess so far NFLX is winning over Amazon. OTOH, I haven't watched (not interested pretty much) any NFLX content, but this is likely contrarian argument, since my taste is completely non-mainstream. I'd never cancel NFLX DVD(BluRay), since that's the only easy/good way to get newer and rarer content. Even with DVD(BluRay) some rare content is not there... they are not rebuying some older DVDs (bunch of anime series have holes - not available, for example).

Not really an investment opinion. ;) Have fun guys.
Title: Re: NFLX - Netflix
Post by: TwoCitiesCapital on January 20, 2016, 11:47:07 AM
They could kill series mid-season based on feedback instead of being forced to make the whole season, but they don't seem to structure the deals that way.

The problem with doing such is that some shoes aren't popular until later in their existence. The actors of Breaking Bad thought the show could potentially be canceled after the second season - it wasn't until season 3 that it really hit its stride and picked up a massive fan base and became a crowd favorite.

Breaking Bad is, by far, one of the best shows I've ever watched. It'd have been a shame if NFLX cut it after Season 2 simply because it wasn't getting a massive response yet.

Also, less in the way of movies, but another personal anecdote. I thought the first two Harry Potter books were mediocre and not very many of my friends were reading them. It wasn't until the 3rd book came out that my immediate friends and myself really go into the story and the books improved from there. Harry Potter has been one of the best franchises for books/movies and yet, it wasn't especially popular until later in its development as well.

Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 11:57:54 AM
They could kill series mid-season based on feedback instead of being forced to make the whole season, but they don't seem to structure the deals that way.

The problem with doing such is that some shoes aren't popular until later in their existence. The actors of Breaking Bad thought the show could potentially be canceled after the second season - it wasn't until season 3 that it really hit its stride and picked up a massive fan base and became a crowd favorite.

OK. But this then becomes unsolvable problem of content companies: is the series XYZ just crap and should be cancelled or is it a diamond in the rough and should be nourished and polished?

(BTW, I did not like or watch BB, but as I said my taste is not mainstream. I also don't know if your claim that they hit success in season 3 is right - I think shows don't get to season 3 without success.)

Quote
Also, less in the way of movies, but another personal anecdote. I thought the first two Harry Potter books were mediocre and not very many of my friends were reading them. It wasn't until the 3rd book came out that my immediate friends and myself really go into the story and the books improved from there. Harry Potter has been one of the best franchises for books/movies and yet, it wasn't especially popular until later in its development as well.

I believe this is just an anecdote. HP books were huge success from book 1: http://news.bbc.co.uk/2/hi/entertainment/820885.stm
Title: Re: NFLX - Netflix
Post by: frommi on January 20, 2016, 12:05:09 PM
I am much more skeptical about NFLX-made-content. Maybe they gonna be the golden boys of content.

I thought that way too, until i watched the stuff. I can see a lot of potential for series with Marvel and DC comics content. Nearly every cinema title these studios have created were blockbusters, so its not some noname company creating some films.
Title: Re: NFLX - Netflix
Post by: JayGatsby on January 20, 2016, 12:06:12 PM
Is netflix truly "creating" content or are they funding/buying it? This would say they're just buying most for it: http://deadline.com/2016/01/john-landgraf-too-much-tv-lemmings-streaming-viewership-data-1201684490/
Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 12:09:26 PM
I am much more skeptical about NFLX-made-content. Maybe they gonna be the golden boys of content.

I thought that way too, until i watched the stuff. I can see a lot of potential for series with Marvel and DC comics content. Nearly every cinema title these studio have created were blockbusters, so its not some noname company creating some films.

You have to be careful that this is not top of the wave. I remember time when Marvel the company was bankrupt (well, for a bunch of reasons) and then suddenly Marvel & DC is the golden calf of content and is being milked like there's no tomorrow. I don't know. Maybe you have another 10 years of this. IMO the superhero genre has jumped the shark at least couple years ago. I'd say getting 3rd rate superhero movies and series is sign of the top. "Superman vs. Batman", "Iron man vs. Captain America" also - remember "Alien vs Predator" and all that? But then I don't like superhero movies in general, so that's probably contrary opinion and you should go long all superhero companies available. ;)
Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 12:10:17 PM
Is netflix truly "creating" content or are they funding/buying it? This would say they're just buying most for it: http://deadline.com/2016/01/john-landgraf-too-much-tv-lemmings-streaming-viewership-data-1201684490/

I don't think there's important difference between the two. Do you think there is?
Title: Re: NFLX - Netflix
Post by: Sionnach on January 20, 2016, 12:19:44 PM
I have no position in NFLX apart 0.0001% of my portfolio that my wife bought when NFLX was 10x lower.

I think the lesson in all of this is pretty clear: listen to your wives.
Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 12:20:42 PM
I have no position in NFLX apart 0.0001% of my portfolio that my wife bought when NFLX was 10x lower.

I think the lesson in all of this is pretty clear: listen to your wives.

"Happy wife, happy life!"  8)
Title: Re: NFLX - Netflix
Post by: TwoCitiesCapital on January 20, 2016, 12:36:38 PM
They could kill series mid-season based on feedback instead of being forced to make the whole season, but they don't seem to structure the deals that way.

The problem with doing such is that some shoes aren't popular until later in their existence. The actors of Breaking Bad thought the show could potentially be canceled after the second season - it wasn't until season 3 that it really hit its stride and picked up a massive fan base and became a crowd favorite.

OK. But this then becomes unsolvable problem of content companies: is the series XYZ just crap and should be cancelled or is it a diamond in the rough and should be nourished and polished?

(BTW, I did not like or watch BB, but as I said my taste is not mainstream. I also don't know if your claim that they hit success in season 3 is right - I think shows don't get to season 3 without success.)

Quote
Also, less in the way of movies, but another personal anecdote. I thought the first two Harry Potter books were mediocre and not very many of my friends were reading them. It wasn't until the 3rd book came out that my immediate friends and myself really go into the story and the books improved from there. Harry Potter has been one of the best franchises for books/movies and yet, it wasn't especially popular until later in its development as well.

I believe this is just an anecdote. HP books were huge success from book 1: http://news.bbc.co.uk/2/hi/entertainment/820885.stm

Maybe it was an immediate success in the U.K., but certainly not globally like it has become. I didn't even hear of the books until the second one had long-been released and it wasn't until book 3 that I recall any of my friends reading them...and they had been recommended to us by two kids in our class who came from the U.K. so I'm thinking my group may have been ahead of most in the U.S. Maybe that's my "America centric" point of view, but those books were directly targeted to kids my age and nobody I knew my age even knew of them except the two British twins in my fourth grade class who got them from their grandmother.

But yes, they may have been an early enough success in the U.K. not to pull the plug. Maybe it was a poor example given the success in the U.K., but on a global scale, 30k is hardly anything.

Title: Re: NFLX - Netflix
Post by: JayGatsby on January 20, 2016, 12:37:52 PM
Is netflix truly "creating" content or are they funding/buying it? This would say they're just buying most for it: http://deadline.com/2016/01/john-landgraf-too-much-tv-lemmings-streaming-viewership-data-1201684490/

I don't think there's important difference between the two. Do you think there is?
If they're creating the content it would imply to me that they have a superior creative team and a wider moat. I'd also think proprietary content would be cheaper and the returns higher on average than something acquired in a competitive bidding process. If they're able to leverage their distribution network to pay more than others that's still good, but with an increasing number of OTT apps, Amazon, HBO, etc that feels tougher to really achieve the margins that people expect. Same reason I'd pay more for Marvel, Disney / Pixar, etc than I would for a generic studio.
Title: Re: NFLX - Netflix
Post by: Jurgis on January 20, 2016, 12:49:12 PM
Is netflix truly "creating" content or are they funding/buying it? This would say they're just buying most for it: http://deadline.com/2016/01/john-landgraf-too-much-tv-lemmings-streaming-viewership-data-1201684490/

I don't think there's important difference between the two. Do you think there is?
If they're creating the content it would imply to me that they have a superior creative team and a wider moat. I'd also think proprietary content would be cheaper and the returns higher on average than something acquired in a competitive bidding process. If they're able to leverage their distribution network to pay more than others that's still good, but with an increasing number of OTT apps, Amazon, HBO, etc that feels tougher to really achieve the margins that people expect. Same reason I'd pay more for Marvel, Disney / Pixar, etc than I would for a generic studio.

No, I don't think they have inside-dedicated team. AFAIK, this is not how it works in movie business overall. Pixar and animation might be different, but for movies (and series I think) you pretty much hire people per movie (although there are some parts of teams that are insourced or chunk-outsourced to known entities). You might do contracts for multiple movies with star director or writer, but in general even Disney does it per movie for live action. Even if Disney owns "Star Wars" franchise, it doesn't mean that they have a dedicated team that will work on every "Star Wars" movie (and nothing else). It wouldn't work.

Of course, there's even more complications with movie business organization and accounting, but that's likely irrelevant here.

Netflix does try to snap up "superior creative teams" for their content. But they are per contract. How well this will work long term is unclear to me.
Title: Re: NFLX - Netflix
Post by: dwy000 on January 20, 2016, 02:50:36 PM
The company has a massive tailwind right now and the international expansion should be a great addition of subs.

Longer term, I think the business is likely to be squeezed from two sides - especially as they get more and more success:

a) Content - other than the proprietary content, the vast (vast) majority of content is the leftovers from the TV and movie studios looking to squeeze every last dollar out of their content before it goes back onto the shelf.  Only now it is becoming the first choice for consumers of that content instead of more profitable channels and is eating the content providers revenue streams.  At some point the content companies will wise up and charge market rates for access to their inventory given it is cannibalizing their other revenue streams.  At that point the cost to Netflix will go way up (see their negotiations with CW network right now) and Netflix will need to significantly increase pricing. 

b) access - as it increasingly eats into their cable business and their VOD business, it is only natural for the cablecos to put usage caps on broadband usage (esp since Netflix accounts for like 20% of all broadband usage after 8pm).  As usage costs for Netflix (or any other OTT) goes up, on top of pricing increases above, Netflix stands to get squeezed on both sides.

Not to take away from their proprietary content - which is awesome.  I just wonder how much subscribers would pay if that was the majority of content available and the price was substantially higher.
Title: Re: NFLX - Netflix
Post by: JayGatsby on January 20, 2016, 05:36:34 PM
No, I don't think they have inside-dedicated team. AFAIK, this is not how it works in movie business overall. Pixar and animation might be different, but for movies (and series I think) you pretty much hire people per movie (although there are some parts of teams that are insourced or chunk-outsourced to known entities). You might do contracts for multiple movies with star director or writer, but in general even Disney does it per movie for live action. Even if Disney owns "Star Wars" franchise, it doesn't mean that they have a dedicated team that will work on every "Star Wars" movie (and nothing else). It wouldn't work.

Of course, there's even more complications with movie business organization and accounting, but that's likely irrelevant here.

Netflix does try to snap up "superior creative teams" for their content. But they are per contract. How well this will work long term is unclear to me.
That sounds right. Maybe it's just semantics, but the current dialog around NFLX seems to imply that they're some sort of content creation juggernaut.
Title: Re: NFLX - Netflix
Post by: cmlber on January 20, 2016, 07:18:07 PM
Bought a bigger position in NFLX today. I really like the content they create and their global expansion is just starting. Based on my napkin math they should be able to double the subscriber base in 3-4 years and every additional customer $ goes directly to the bottom line. Even if you believe that they don`t generate profits today, (which i don`t) that means 8 billion $ earnings in 2020. Put a conservative multiple of 15x on it and we are at a 120 billion marketcap company in 4 years. Thats nearly a triple from here. Any flaws in my thinking?

I have a very hard time seeing NFLX earning $8 billion in 2020.  HBO earns $1.8 billion pre-tax today and already has roughly 2x as many subscribers worldwide, charges 2x as much per month, has a much better library of exclusive content, and has a huge chunk of new releases tied up for a while allowing it to actually have good movies. 

Essentially all the content in the U.S. is owned by six companies.  Do you really think those six companies are going to sit and watch NFLX make $8 billion a year distributing their content?  They'll all have their own apps very soon and then there will be a free or dirt cheap aggregator (probably Apple) that bundles it all together in one NFLX like user interface.
Title: Re: NFLX - Netflix
Post by: dorsiacapital on January 21, 2016, 12:32:16 AM
Is netflix truly "creating" content or are they funding/buying it? This would say they're just buying most for it: http://deadline.com/2016/01/john-landgraf-too-much-tv-lemmings-streaming-viewership-data-1201684490/

I don't think there's important difference between the two. Do you think there is?
If they're creating the content it would imply to me that they have a superior creative team and a wider moat. I'd also think proprietary content would be cheaper and the returns higher on average than something acquired in a competitive bidding process. If they're able to leverage their distribution network to pay more than others that's still good, but with an increasing number of OTT apps, Amazon, HBO, etc that feels tougher to really achieve the margins that people expect. Same reason I'd pay more for Marvel, Disney / Pixar, etc than I would for a generic studio.

No, I don't think they have inside-dedicated team. AFAIK, this is not how it works in movie business overall. Pixar and animation might be different, but for movies (and series I think) you pretty much hire people per movie (although there are some parts of teams that are insourced or chunk-outsourced to known entities). You might do contracts for multiple movies with star director or writer, but in general even Disney does it per movie for live action. Even if Disney owns "Star Wars" franchise, it doesn't mean that they have a dedicated team that will work on every "Star Wars" movie (and nothing else). It wouldn't work.

Of course, there's even more complications with movie business organization and accounting, but that's likely irrelevant here.

Netflix does try to snap up "superior creative teams" for their content. But they are per contract. How well this will work long term is unclear to me.

Netflix does have an in house team of development executives that choose which writers/directors get the money to make their shows. What distinguishes Netflix (and Amazon Prime) is that the development executives are much more hands off than development executives at other networks (HBO etc.,)

In general, writers/directors are not terribly fond of the development process but it (arguably) does serve an important creative function.  The creative freedom that Netflix gives is one of its selling points in getting writers/directors to choose to make their projects with Netflix instead of one of their competitors. (The basic process is a writer/director has an idea for a tv show; the writer/director pitches it to a bunch of different networks, the networks, if they like it, offer them money to make it, the writer/director chooses who to work with).

Whether or not creative teams have reliable eyes for "good shows" is a very controversial issue. For example, AMC started off on an incredible run (Mad Men, Breaking Bad, Walking Dead) and then hasn't really had a hit since.  Usually, development execs try to buy certainty either with stars or brands - I do think Netflix's deal with Marvel is very promising. But, an important note, we don't know the terms of that deal. For instance, does Netflix actually "own" Jessica Jones, or does it only have a 3 year exclusive window to air Jessica Jones and the other 3 shows. (For example, Netflix doesn't actually own House of Cards or Orange is the New Black (http://www.theverge.com/2015/4/21/8463743/netflix-ownership-tv-shows) it will have to renegotiate at some future point if it wants to continue to air those shows on its channel.)

I do think the risk of competition from the content creators should really, really, really not be underrated.  Could Disney create a "Disney" version of Netflix in 5 years with Marvel shows, Star Wars, all the Disney movies, and other errata? I don't see any reason why not...


Title: Re: NFLX - Netflix
Post by: dorsiacapital on January 21, 2016, 12:43:30 AM
One other point on global growth

It's important to remember that "US Netflix" is very different from "Japan Netflix" or any other international Netflix because of content licensing agreements.

I think Netflix's recent announcement that it's stepping up VPN blocking efforts (http://www.wired.com/2016/01/vpn-crackdown-wont-affect-subscriber-numbers-netflix-says/) is a very strong sign that content owners are demanding Netflix increase efforts to ensure licensing agreements are actually adhered to.

In order to offer a comparable product in other countries, Netflix is going to have to ink new content licensing deals (from an FCF negative position)....

This is a very useful list that compares the % of U.S. content available in other countries (http://www.finder.com/netflix-usa-vs-world-content) - many of the big markets (France, Germany, Korea, Japan, India) are all under 35%...
Title: Re: NFLX - Netflix
Post by: loganc on January 21, 2016, 02:32:04 AM
I appreciate that everyone wants to talk about the strides that NFLX has made with respect to exclusive content.  The company has done a great job in that regard over the last few years.  However, HBO continues to deliver on that front and Amazon has obviously made strides to that end as well.

I have a few comments for NFLX bulls:

(1) Contribution Margin from Growth

I think the math that has been thrown around in this thread is highly suspect.  I think it is fairly clear that the contribution margin from incremental subscriber dollars will not be 100%.  First, the International streaming business is sub-scale and incremental international subscriber revenues (i.e. the high growth engine) are not flowing directly to the bottom line.  Second, management is guiding for a contribution margin target of 40% for the Domestic streaming business in 2020.  Even in the Domestic business with scale, the assumption of incremental subscriber revenue [1] flowing directly to the bottom line would imply well north of 50% contribution margins.  I think the back of the envelope math is hard to justify here.     

(2) Content Liabilities & Capital Requirements

As of 3Q15, 90% of 10.4B of total content liabilities are due within three years.  I believe this necessarily means that NFLX is going to be renegotiating these costs within that time frame.  What sort of terms will NFLX be able to negotiate?  I think this is a very tough question. 

Further, given the lack of scale in the International business and the fact that the major growth driver is in the International geographies, I believe that NFLX is going to need to raise significant capital to achieve the growth that is implicit in the stock price.  To this point, it seems to me that the profitable DVD business has more or less offset the losses from the International streaming business.  The DVD business seems to be in decline and the International streaming business is the primary growth engine.  It seems like this dynamic is going to break soon and, while the margin from the Domestic streaming business should expand, I think the NFLX shareholder has to assume that quite a lot of additional capital must be raised.

Management appears to be guiding for a capital raise in late 2016 or early 2017 and it would appear that they expect to do a debt financing.  Perhaps they will be able to pull off a debt financing at that time.  Obviously, it is hard to prognosticate the state of the credit markets.  However, I find it very interesting that management states their intent to lower the "blended cost of capital over time, while maintaining financial flexibility."  It seems to me that achieving that objective would necessarily include issuing NFLX common stock.  At present, a convertible security or common stock issuance seems like the best way to achieve that objective.   

(3) Competitive Advantage

When I think about NFLX from a very high level, I struggle to understand the competitive advantage of this business.  I don't believe that streaming technology is a competitive advantage as it is ubiquitous.  I would acknowledge that the "discovery" aspect of NFLX is very good and that they have done a great job of "curating" content.  In terms of the proprietary content, I am not sure how much anyone is going to care about House of Cards in five years.  I am not sure what kind of terminal multiple one would put on NFLX if the end game is to turn it into a de facto movie studio.
   
[1] I am assuming growth to 64MM subs and $10 ARPU in 2020.
Title: Re: NFLX - Netflix
Post by: frommi on January 21, 2016, 07:41:57 AM
I have a very hard time seeing NFLX earning $8 billion in 2020.  HBO earns $1.8 billion pre-tax today and already has roughly 2x as many subscribers worldwide, charges 2x as much per month, has a much better library of exclusive content, and has a huge chunk of new releases tied up for a while allowing it to actually have good movies. 

Essentially all the content in the U.S. is owned by six companies.  Do you really think those six companies are going to sit and watch NFLX make $8 billion a year distributing their content?  They'll all have their own apps very soon and then there will be a free or dirt cheap aggregator (probably Apple) that bundles it all together in one NFLX like user interface.

I agree that having the content is important, but Disney and HBO have their apps already in place since some time and still don`t have that much subscribers. So it looks like having the biggest distribution network, the cheapest price and the best user experience may be valuable. HBO has a lot of their subscribers via the traditional cable channels, where you don`t know if that customer is just paying for it because its in the cable bundle. When these customers cut the cord, they won`t install an HBO now app, especially at current prices. I for example had it in my Sky Germany package, but never watched any of their series.

Netflix on the other hand is already the biggest spender on content (>50% of revenue), and i doubt that HBO will grow meaningful in the future. For Netflix, more subscribers = more revenue = more content = more subscribers will be true for some time in the future, while HBO`s moat will shrink and with it its revenues.
When you are in a competive bidding process and your competitors get weaker, than prices for content will go down. I know that is not what a lot of people on CoBF want to hear, but i think that is what will happen.
Title: Re: NFLX - Netflix
Post by: LC on January 21, 2016, 07:51:27 AM
I'm torn on Netflix.

On one hand I think they create good internal content. The flipside is that they create good internal content now. Successful content creation can be a difficult task to replicate over time and I don't see anything special about Netflix which causes me to believe they will be able to replicate this feat.

I agree they should be able to grow the subscriber base.

On the other hand I believe their acquired content will fall in quality as more and more content creators wise up. IMHO their library is not as impressive as it was a few years ago. They have had to make choices based on rising content prices from studios.

I'd rather own a quality content producer (Disney for example) than the company distributing the content, especially when I'm not convinced on the staying power of that distributor.
Title: Re: NFLX - Netflix
Post by: cmlber on January 21, 2016, 08:08:26 AM
I have a very hard time seeing NFLX earning $8 billion in 2020.  HBO earns $1.8 billion pre-tax today and already has roughly 2x as many subscribers worldwide, charges 2x as much per month, has a much better library of exclusive content, and has a huge chunk of new releases tied up for a while allowing it to actually have good movies. 

Essentially all the content in the U.S. is owned by six companies.  Do you really think those six companies are going to sit and watch NFLX make $8 billion a year distributing their content?  They'll all have their own apps very soon and then there will be a free or dirt cheap aggregator (probably Apple) that bundles it all together in one NFLX like user interface.

I agree that having the content is important, but Disney and HBO have their apps already in place since some time and still don`t have that much subscribers. So it looks like having the biggest distribution network, the cheapest price and the best user experience may be valuable. HBO has a lot of their subscribers via the traditional cable channels, where you don`t know if that customer is just paying for it because its in the cable bundle. When these customers cut the cord, they won`t install an HBO now app, especially at current prices. I for example had it in my Sky Germany package, but never watched any of their series.

Netflix on the other hand is already the biggest spender on content (>50% of revenue), and i doubt that HBO will grow meaningful in the future. For Netflix, more subscribers = more revenue = more content = more subscribers will be true for some time in the future, while HBO`s moat will shrink and with it its revenues.
When you are in a competive bidding process and your competitors get weaker, than prices for content will go down. I know that is not what a lot of people on CoBF want to hear, but i think that is what will happen.

Frommi, I think investors have been conditioned to believe in the " more subscribers = more revenue = more content = more subscribers " flywheel by the experience of the cable industry.  But there is a major difference here.

In cable, scale means you have more negotiating leverage and can therefore get content cheaper on a per user basis.  There historically have really only been a couple buyers of content in a given geographic area: the local cable company and satellite companies.  Now you have the local cable company, Dish, Directv, Nflx, Amzn, soon Apple, telcos, or you can very easily go direct to the customer through Apple TV or internet connected TVs.

As a result, content owners have all the leverage.  Every time NFLX grows subscriber count, the content costs will just rise proportionally. 

I think it's a mistake to call this a competitive bidding situation, most of these content deals are not exclusive.  Having more subscribers means you can pay more than someone with fewer subscribers, but Disney can (and will) just sell to both companies and charge based on number of subscribers or viewing hours. 

If there is $120 billion of value to go after, and the capital costs are basically $0 and there are no barriers to entry whatsoever and no switching costs (I can turn NFLX subscription on and off in 2 minutes), why won't competition eat away at margins?
Title: Re: NFLX - Netflix
Post by: frommi on January 21, 2016, 08:08:31 AM
I'd rather own a quality content producer (Disney for example) than the company distributing the content, especially when I'm not convinced on the staying power of that distributor.

I understand that, but i think that is like playing the game like the ball is standing still and not going where the ball will be 10 years out. Content at the moment is valuable because there are a lot of distributors out there bidding for it. In the long run the subpar distribution channels will disappear because they can`t keep up with the big guys. For me in the endgame there will only be one or two players, and outside of Netflix and Amazon i see nobody that is willing to give up short term profits for long term success. How valuable is an internet TV distribution monopoly/oligopoly?

Of course i can be wrong on a lot of points and thats the reason i secured the position with a put. For me personally since i missed buying Apple stock in 07/08 despite being one of the first iPhone users i am really looking hard at what things i use and if i can profit from that insight. I think i would really regret not buying the stock if it doubles from here, especially since the chart looks set up for an hyperbolic run. But who knows, if this turns out to be a mistake i hopefully learn a lesson or two.
Title: Re: NFLX - Netflix
Post by: cmlber on January 21, 2016, 08:15:15 AM
I'd rather own a quality content producer (Disney for example) than the company distributing the content, especially when I'm not convinced on the staying power of that distributor.

I understand that, but i think that is like playing the game like the ball is standing still and not going where the ball will be 10 years out. Content at the moment is valuable because there are a lot of distributors out there bidding for it. In the long run the subpar distribution channels will disappear because they can`t keep up with the big guys. For me in the endgame there will only be one or two players, and outside of Netflix and Amazon i see nobody that is willing to give up short term profits for long term success. How valuable is an internet TV distribution monopoly/oligopoly?

Of course i can be wrong on a lot of points and thats the reason i secured the position with a put. For me personally since i missed buying Apple stock in 07/08 despite being one of the first iPhone users i am really looking hard at what things i use and if i can profit from that insight. I think i would really regret not buying the stock if it doubles from here, especially since the chart looks set up for an hyperbolic run. But who knows, if this turns out to be a mistake i hopefully learn a lesson or two.

I think you've got this totally backwards.  The # of distributors will rise dramatically over time.  Distributing content over the Internet has virtually no fixed costs and there is no customer switching cost.  I think it's a big mistake to think of content as fixed.

If NFLX wasn't doing original content and was a pure distributor, it would be a gigantic short.  The only potential saving grace, and reason I'm not short, is the original content.  If they can hook their user base to long life TV shows, switching costs will rise and they can potentially raise price. 
Title: Re: NFLX - Netflix
Post by: rmitz on January 21, 2016, 08:34:11 AM
That sounds right. Maybe it's just semantics, but the current dialog around NFLX seems to imply that they're some sort of content creation juggernaut.

Itís more about the fact they can fund content creation because itís more useful and has more utility in their targeted viewing envrionment.  It also allows them to capture more of the value chain.
Title: Re: NFLX - Netflix
Post by: dwy000 on January 21, 2016, 09:07:02 AM
The other player who may be taking long term steps to get it right is YouTube.  They are working with content partners to allow them to develop their own channels which allows them to maintain the brand (so you aren't just watching Mad Men, you are watching AMC) and also manage the advertising content.   YouTube doesn't have to pay for content, they get a share of the revenues. 

I struggle to believe there will be 10-15 OTT providers each with 1-2 proprietary channels and each with separate subscriber bases getting monthly bills.  Content will be aggregated because it is easier for consumers and provides access to bulk for providers.  Right now the cablecos do that over cable and are probably the best positioned to do it over internet - but obviously that cannibalizes current revenues.

The other factor you can't ignore with OTT and cord cutting is the cost of naked broadband.  It's not cheap if you want a decent connection to watch HD video and certainly a large premium to packaged broadband (with cable).  If cablecos switch to a metered or capped system that makes internet based streaming more expensive, it will throw the whole business model into disarray.
Title: Re: NFLX - Netflix
Post by: jschembs on January 21, 2016, 09:17:40 AM
I struggle to believe there will be 10-15 OTT providers each with 1-2 proprietary channels and each with separate subscriber bases getting monthly bills.  Content will be aggregated because it is easier for consumers and provides access to bulk for providers.  Right now the cablecos do that over cable and are probably the best positioned to do it over internet - but obviously that cannibalizes current revenues.

Recent John Malone investment - http://www.uxpsystems.com/ - opportunity to integrate disparate OTT platforms for billing/customer service purposes. This could make it much easier for more fractured OTT offerings, which I think is a significant risk to the aggregators.
Title: Re: NFLX - Netflix
Post by: frommi on January 22, 2016, 08:55:47 AM
Thanks for all the feedback, in the end my conviction was not strong enough to hold the position. Had a sleepless night and seeing Hasting sell big blocks of stock hasn`t helped either. I think valuation is really a bit stretched here and my napkin math was a bit to easy.
Title: Re: NFLX - Netflix
Post by: TwoCitiesCapital on July 18, 2016, 02:52:00 PM
Thanks for all the feedback, in the end my conviction was not strong enough to hold the position. Had a sleepless night and seeing Hasting sell big blocks of stock hasn`t helped either. I think valuation is really a bit stretched here and my napkin math was a bit to easy.

Congrats!

I'm thinking about re-opening my short now that it's company specific woes dragging it down and not general market sentiment. Each $1 the stock price drops is a double-whammy because it increases the number of shares they have to issue to keep the company afloat to continue to afford their current cash burn/content acquisition.

If we're getting genuine concerns about the future growth of the company, methinks we'll see significantly lower lows as people try to front-run the multi-billion dollar issuances that will dilute them massively given that raising more debt isn't really an option.
Title: Re: NFLX - Netflix
Post by: Vish_ram on July 18, 2016, 04:19:43 PM
Last week I cancelled my NFLX membership. I get quite a few shows and movies to watch in Amazon prime. The content in prime has absolutely exploded.

I do occasionally order movies in iTunes.
Title: Re: NFLX - Netflix
Post by: muscleman on July 19, 2016, 07:09:08 AM
I have a very hard time seeing NFLX earning $8 billion in 2020.  HBO earns $1.8 billion pre-tax today and already has roughly 2x as many subscribers worldwide, charges 2x as much per month, has a much better library of exclusive content, and has a huge chunk of new releases tied up for a while allowing it to actually have good movies. 

Essentially all the content in the U.S. is owned by six companies.  Do you really think those six companies are going to sit and watch NFLX make $8 billion a year distributing their content?  They'll all have their own apps very soon and then there will be a free or dirt cheap aggregator (probably Apple) that bundles it all together in one NFLX like user interface.

I agree that having the content is important, but Disney and HBO have their apps already in place since some time and still don`t have that much subscribers. So it looks like having the biggest distribution network, the cheapest price and the best user experience may be valuable. HBO has a lot of their subscribers via the traditional cable channels, where you don`t know if that customer is just paying for it because its in the cable bundle. When these customers cut the cord, they won`t install an HBO now app, especially at current prices. I for example had it in my Sky Germany package, but never watched any of their series.

Netflix on the other hand is already the biggest spender on content (>50% of revenue), and i doubt that HBO will grow meaningful in the future. For Netflix, more subscribers = more revenue = more content = more subscribers will be true for some time in the future, while HBO`s moat will shrink and with it its revenues.
When you are in a competive bidding process and your competitors get weaker, than prices for content will go down. I know that is not what a lot of people on CoBF want to hear, but i think that is what will happen.

Frommi, I think investors have been conditioned to believe in the " more subscribers = more revenue = more content = more subscribers " flywheel by the experience of the cable industry.  But there is a major difference here.

In cable, scale means you have more negotiating leverage and can therefore get content cheaper on a per user basis.  There historically have really only been a couple buyers of content in a given geographic area: the local cable company and satellite companies.  Now you have the local cable company, Dish, Directv, Nflx, Amzn, soon Apple, telcos, or you can very easily go direct to the customer through Apple TV or internet connected TVs.

As a result, content owners have all the leverage.  Every time NFLX grows subscriber count, the content costs will just rise proportionally. 

I think it's a mistake to call this a competitive bidding situation, most of these content deals are not exclusive.  Having more subscribers means you can pay more than someone with fewer subscribers, but Disney can (and will) just sell to both companies and charge based on number of subscribers or viewing hours. 

If there is $120 billion of value to go after, and the capital costs are basically $0 and there are no barriers to entry whatsoever and no switching costs (I can turn NFLX subscription on and off in 2 minutes), why won't competition eat away at margins?

I agree with you. The difference is that cable cos are local monopolies, but NFLX is not. I expect the number of OTTs to mushroom quickly in the future. It is just so easy to create one.
However, if NFLX succeeds in creating a lot of their own long shelf life content, then the story would change, as they evolve into a content maker. But how likely is it that they are a better content maker than the existing ones? The content makers seem to have a first mover advantage.
Title: Re: NFLX - Netflix
Post by: cmlber on July 19, 2016, 07:40:39 AM
I have a very hard time seeing NFLX earning $8 billion in 2020.  HBO earns $1.8 billion pre-tax today and already has roughly 2x as many subscribers worldwide, charges 2x as much per month, has a much better library of exclusive content, and has a huge chunk of new releases tied up for a while allowing it to actually have good movies. 

Essentially all the content in the U.S. is owned by six companies.  Do you really think those six companies are going to sit and watch NFLX make $8 billion a year distributing their content?  They'll all have their own apps very soon and then there will be a free or dirt cheap aggregator (probably Apple) that bundles it all together in one NFLX like user interface.

I agree that having the content is important, but Disney and HBO have their apps already in place since some time and still don`t have that much subscribers. So it looks like having the biggest distribution network, the cheapest price and the best user experience may be valuable. HBO has a lot of their subscribers via the traditional cable channels, where you don`t know if that customer is just paying for it because its in the cable bundle. When these customers cut the cord, they won`t install an HBO now app, especially at current prices. I for example had it in my Sky Germany package, but never watched any of their series.

Netflix on the other hand is already the biggest spender on content (>50% of revenue), and i doubt that HBO will grow meaningful in the future. For Netflix, more subscribers = more revenue = more content = more subscribers will be true for some time in the future, while HBO`s moat will shrink and with it its revenues.
When you are in a competive bidding process and your competitors get weaker, than prices for content will go down. I know that is not what a lot of people on CoBF want to hear, but i think that is what will happen.

Frommi, I think investors have been conditioned to believe in the " more subscribers = more revenue = more content = more subscribers " flywheel by the experience of the cable industry.  But there is a major difference here.

In cable, scale means you have more negotiating leverage and can therefore get content cheaper on a per user basis.  There historically have really only been a couple buyers of content in a given geographic area: the local cable company and satellite companies.  Now you have the local cable company, Dish, Directv, Nflx, Amzn, soon Apple, telcos, or you can very easily go direct to the customer through Apple TV or internet connected TVs.

As a result, content owners have all the leverage.  Every time NFLX grows subscriber count, the content costs will just rise proportionally. 

I think it's a mistake to call this a competitive bidding situation, most of these content deals are not exclusive.  Having more subscribers means you can pay more than someone with fewer subscribers, but Disney can (and will) just sell to both companies and charge based on number of subscribers or viewing hours. 

If there is $120 billion of value to go after, and the capital costs are basically $0 and there are no barriers to entry whatsoever and no switching costs (I can turn NFLX subscription on and off in 2 minutes), why won't competition eat away at margins?

I agree with you. The difference is that cable cos are local monopolies, but NFLX is not. I expect the number of OTTs to mushroom quickly in the future. It is just so easy to create one.
However, if NFLX succeeds in creating a lot of their own long shelf life content, then the story would change, as they evolve into a content maker. But how likely is it that they are a better content maker than the existing ones? The content makers seem to have a first mover advantage.

Also, you hear a lot about their "scale advantage" in producing content.  That's simply not true.  If anything it's a disadvantage.  Any third party making content has the ability to sell it to Netflix AND whoever else wants to buy it.  If Netflix is making exclusive content then it services a much smaller population than third party content studios.

That's not to say they couldn't get lucky with some hit content that makes it worth this valuation, but then you're essentially buying into a start up content studio which historically has been an average return on capital business at best. Paying 18x book value for a business with average returns on capital doesn't sound that exciting.
Title: Re: NFLX - Netflix
Post by: Spekulatius on August 28, 2016, 07:44:35 AM
Last week I cancelled my NFLX membership. I get quite a few shows and movies to watch in Amazon prime. The content in prime has absolutely exploded.

I do occasionally order movies in iTunes.

We cancelled our NFLX membership as well, for the same reason. We had it for 6 years or so, but also have prime and I found that more than 80% of what we watch in Netflix, is covered by Amazon Prime.
Title: Re: NFLX - Netflix
Post by: SlowAppreciation on March 21, 2017, 10:35:49 AM
Bought a bigger position in NFLX today. I really like the content they create and their global expansion is just starting. Based on my napkin math they should be able to double the subscriber base in 3-4 years and every additional customer $ goes directly to the bottom line. Even if you believe that they don`t generate profits today, (which i don`t) that means 8 billion $ earnings in 2020. Put a conservative multiple of 15x on it and we are at a 120 billion marketcap company in 4 years. Thats nearly a triple from here. Any flaws in my thinking?

(I've just started looking at Netflix so take everything with a grain of salt)

I don't find any flaws with it really, but premium content costs are around $7b annually, whereas HBO is 1/3rd of that with 2x the subscriber base.
While you mentioned any subscriber growth goes straight to the bottom line as content costs are spread across a greater # of users, what makes this business any better than HBO? In fact, HBO's distribution costs are lower since they license some of their content.

Lastly, while Netflix's content is great, I still don't think it's quite on par with HBO.
Title: Re: NFLX - Netflix
Post by: Jurgis on March 21, 2017, 12:52:55 PM
Lastly, while Netflix's content is great, I still don't think it's quite on par with HBO.

There's a lot of crap Netflix content IMO. (Don't rely on my taste though... actually if you asked me, I don't remember a single good Netflix show. But there's more than one that are crap even based on Netflix show fans.)

IMO Netflix/Amazon are fueling content bubble. There was too much content before they joined the fray. Now it's getting way too much. I guess content is still quite profitable, since we've seen pretty zero contraction in the business so far (apart from STRZA purchase by LGF which may not have reduced content much). But I wonder.
Title: Re: NFLX - Netflix
Post by: rkbabang on March 21, 2017, 12:57:45 PM
Last week I cancelled my NFLX membership. I get quite a few shows and movies to watch in Amazon prime. The content in prime has absolutely exploded.

I do occasionally order movies in iTunes.


We cancelled our NFLX membership as well, for the same reason. We had it for 6 years or so, but also have prime and I found that more than 80% of what we watch in Netflix, is covered by Amazon Prime.


That surprises me.  My kids watch youTube more than anything, but my wife and I watch probably 80% Netflix, 15% cable/HBO/Showtime, and 5% Amazon Prime.   Amazon's originals are good and getting better, but besides that we can rarely find anything to watch on Amazon.   I don't know if it is that the app is so bad and difficult to search and they don't recommend shows as well as Netflix or what?  That goes for everything except their originals which are all in one place and easy to find.   We will sit down and open the Amazon app, search for a while then go to Netflix and find something to watch almost immediately.  If it wasn't for the Amazon originals we wouldn't watch Amazon prime at all.  We are members for the shipping and the cloud storage, not for the streaming.



Title: Re: NFLX - Netflix
Post by: Kapitalust on March 21, 2017, 01:12:56 PM
Netflix has a lot of shit content with some gems sprinkled in. Over the years, I've noticed I was spending more time browsing around looking for something actually good to watch rather than watching anything at all.

They also make some good original content, however, most of the original content is fairly mediocre.

We've shifted in recent years to cancelling our Netflix subscription and then just turning it back on every now and then if there is a show/movie that we want to watch, then just turning off the auto-renew so that it cancels in 1 month.
Title: Re: NFLX - Netflix
Post by: fareastwarriors on March 21, 2017, 01:30:50 PM
I just watch old stuff on Netflix. I don't want to watch something with just one season available and then I have to wait for one year before the next season is released.

You guys should just share accounts. My current plan allows for 2 streams. They are constantly being used. I share among like 5/6 people. No one is on Prime Video even though that is being shared too.
Title: Re: NFLX - Netflix
Post by: TwoCitiesCapital on March 21, 2017, 03:49:22 PM
Netflix has a lot of shit content with some gems sprinkled in. Over the years, I've noticed I was spending more time browsing around looking for something actually good to watch rather than watching anything at all.

They also make some good original content, however, most of the original content is fairly mediocre.

We've shifted in recent years to cancelling our Netflix subscription and then just turning it back on every now and then if there is a show/movie that we want to watch, then just turning off the auto-renew so that it cancels in 1 month.

This is what I've started doing. I cycle through the subscriptions based on when things are being released. Have been subscribed to NFLX the last 2-3 months to watch Shameless and some other shows that I was missing the new seasons of and will cancel and re-subscribe to HBO when Game of Thrones comes back on.

HBOs content is more limited, but of exponentially greater quality.
Title: Re: NFLX - Netflix
Post by: LC on March 21, 2017, 09:11:41 PM
Netflix has realized that "killer content" is where its at, which is why they are producing their own now.

HBO sells the majority of its subs based on 1 show.

Distribution is the commodity.
Content is the value add
Title: Re: NFLX - Netflix
Post by: bonkers on March 22, 2017, 03:26:34 AM
As many others have highlighted, also to me Netflix does not seem to have clear strong advantages. However, there is something on the soft side from just having scale, which are
1) huge visibility and share of mind with global audience
2) being pre-installed on many devices and thus easy to use

The average consumer isn't very tech-savvy or monitoring every penny (unlike maybe most people here). They look for easy solutions, and it's much easier to choose Netflix and keep it vs. to shop around all the time among unknown providers. Even if this advantage is not durable, for the time being it's real.

What comes to content I do presume that Netflix should have some scale just from the huge bargaining power they start to have (do you want access to Netflix audience or not?), although it is smaller than in cable as deals technology-wise probably even cannot be geographically exclusive.

I'm speculating if Netflix might use user data from its large audience to produce better content, like series that addict their watchers better. This might give it an advantage the old players have not traditionally had (but that they could soon acquire as well), helping to produce higher ROI content.

Otherwise I think content production is risky business, and I wouldn't want to be in it. I remember John Malonen saying something like he has made the mistake of entering content production three times, always with the same (bad) result.
Title: Re: NFLX - Netflix
Post by: rogermunibond on March 22, 2017, 09:02:24 AM
Does this give Amazon Prime Video an advantage?  Granted they are also paying for free shipping.  There's likely to be less churn since it's sold on an annual subscription.  Didn't realize people were churning HBO Go, Netflix, Hulu, etc.
Title: Re: NFLX - Netflix
Post by: DooDiligence on March 23, 2017, 05:33:24 AM
Does this give Amazon Prime Video an advantage?  Granted they are also paying for free shipping.  There's likely to be less churn since it's sold on an annual subscription.  Didn't realize people were churning HBO Go, Netflix, Hulu, etc.

Consumers are learning they can opt out as content gets stale & opt in again when it freshens.

Amazon seems to have the best value add & I think you can go month to month now in addition to the annual membership.

Maybe WalMart will buy Netflix  :P
Title: Re: NFLX - Netflix
Post by: fareastwarriors on March 24, 2017, 12:02:06 PM
Netflix: The Monster Thatís Eating Hollywood

The streaming-video service is hogging talent and pushing up prices, spurring pushback from rival TV producers who once saw it as a partner; 70 new titles this year

https://www.wsj.com/articles/netflix-the-monster-thats-eating-hollywood-1490370059 (https://www.wsj.com/articles/netflix-the-monster-thats-eating-hollywood-1490370059)
Title: Re: NFLX - Netflix
Post by: rogermunibond on March 24, 2017, 12:03:43 PM
Interesting stat 70% of viewing on Netflix still licensed content.
Title: Re: NFLX - Netflix
Post by: DTEJD1997 on March 24, 2017, 11:49:34 PM
Hey all:

I've had Netflix for just under a year now.  I'm getting ready to drop it. 

I've watched what I want.  I found some good stuff that I didn't know was out there.  HOWEVER, it is starting to run dry.  I am also noticing that a lot of stuff I'm starting to watch just is not really that good.  That goes for a lot of Netflix produced content too.

Maybe in 6 months or a year, when good content refreshes, I'll come back for a couple/few months to watch it.

I also let my Hulu subscription lapse when my credit card turned over.  Hulu has some good stuff, but I've watched most of it.

Most of my time now I'm listening to podcasts, reading, and watching/listening to the YouTube.

Title: Re: NFLX - Netflix
Post by: benchmark on July 13, 2017, 04:40:33 PM
I see no lasting competitive advantage that NFLX has over AMZN -- the value prop isn't quite there, though they have been successful for content. However, content is such a flaky business, I don't know how one can keep up.

I'm tempted to short it :)
Title: Re: NFLX - Netflix
Post by: atbed on July 14, 2017, 06:11:38 AM
I recently closed my position, but I can see it continue its move higher.

When I think about the value of my NFLX subscription, I look at how much the library has changed since I first subscribed. From a mathematical standpoint, they are spending multiples more and the change is noticeable. Yet, my monthly payment has gone up a buck. Furthermore, my household shares my subscription. While I won't watch anything for periods, others do. So it's hard for me to cancel. Given this dynamic, it's difficult to see churn accelerate as NFLX ramps up original spend.

I believe more will watch their Amazon content, but for now actual viewership is extremely weak. Perhaps, perception just needs to catch up to reality; there is good content on Prime. However, they also need to smooth out their edges. The last time I was on there, they were promoting a pilot for Jean Claude Van something on the front page. How is that a good decision? Why aren't they promoting something that can actually be binged? In addition, their UI needs fundamental improvements to catch up to NFLX. There are benefits to having a narrow focus.

Maybe at some point we reach a tipping point, when consumers realize what Amazon has to offer. But for now, I don't think it matters. NFLX is increasing their originals at such a fast rate that it exceeds our ability to view it all.
Title: Re: NFLX - Netflix
Post by: Jurgis on July 14, 2017, 07:09:39 AM
We currently watch both Amazon and Netflix.

I'd cancel Netflix, but wife is against it.

I don't think I've seen any Netflix original that was worth it. But I think that's the same with Amazon originals too. I might be forgetting something that was good though. And my taste is definitely not mainstream.

My biggest concern with Netflix is that they gonna spend themselves into financial trouble. However, I don't really know what residuals they keep and what the residual library is worth. So I don't think I have deep insight into how this gonna work out.

IMO Netflix is much more sticky internationally than US-side at this point.
Title: Re: NFLX - Netflix
Post by: Liberty on July 14, 2017, 07:44:18 AM
I don't think I've seen any Netflix original that was worth it. But I think that's the same with Amazon originals too. I might be forgetting something that was good though. And my taste is definitely not mainstream.

Two of my fave recent shows have actually been Amazon originals: 'Sneaky Pete' and 'Patriot'. Have you seen those?
Title: Re: NFLX - Netflix
Post by: villainx on July 14, 2017, 07:52:22 AM
From a different perspective, for some parents, the children and kids programming are important. 

But with both companies pursuing original programming, and sourcing from multiple places, it's hard to say what's good*.

*Good in terms of educational and instructional, like Daniel Tiger or Wild Kratts.  Diversions are good too, like Justice League, I enjoyed them as a youngster, but as a parent, I avoid them.
Title: Re: NFLX - Netflix
Post by: benchmark on July 14, 2017, 08:44:11 AM
I don't think I've seen any Netflix original that was worth it. But I think that's the same with Amazon originals too. I might be forgetting something that was good though. And my taste is definitely not mainstream.

Two of my fave recent shows have actually been Amazon originals: 'Sneaky Pete' and 'Patriot'. Have you seen those?

I like 'Sneaky Pete' but haven't watched "Patriot'.

From the valuation perspective, I just don't see how Netflix can spend their way to keep the 'growth' and justify the current price.
Title: Re: NFLX - Netflix
Post by: rkbabang on July 14, 2017, 09:11:56 AM
I don't think I've seen any Netflix original that was worth it. But I think that's the same with Amazon originals too. I might be forgetting something that was good though. And my taste is definitely not mainstream.

Two of my fave recent shows have actually been Amazon originals: 'Sneaky Pete' and 'Patriot'. Have you seen those?

I like 'Sneaky Pete' but haven't watched "Patriot'.

From the valuation perspective, I just don't see how Netflix can spend their way to keep the 'growth' and justify the current price.

I also loved Sneaky Pete, but haven't yet watched Patriot.  I love both Netflix and Amazon, but what worries me is that as my kids get older they don't seem to watch anything but YouTube.  I've asked them about it and they say that their friends are the same. (11th-12th grades) . I can see them not bothering with cable or netflix when they are out of the house as unnecessary expenses.  And if they decided to subscribe to anything YouTube Red would be first.  Also even when they are out of the house what is to stop my kids from continuing to use my password on the rare occasion they do want to watch Netflix?  I think the demographic trends may be against NFLX.  I've owned the stock in the past, but no longer do.
Title: Re: NFLX - Netflix
Post by: Spekulatius on July 14, 2017, 09:26:02 AM
I think conventional cable is in big trouble, as younger folks develop totally different view habits.
We ditched our cable a while ago and hardly anyone noticed since everyone is already mostly watching streaming services anyways. I cancelled Netflix as well and watch Prime. I found  plenty on Prime to watch, once we are through, I will turn on Netflix again.

I think churn will probably increase across the board for pretty much everything.
Title: Re: NFLX - Netflix
Post by: Jurgis on July 14, 2017, 09:33:58 AM
I don't think I've seen any Netflix original that was worth it. But I think that's the same with Amazon originals too. I might be forgetting something that was good though. And my taste is definitely not mainstream.

Two of my fave recent shows have actually been Amazon originals: 'Sneaky Pete' and 'Patriot'. Have you seen those?

Thanks for suggestions, but not my cup of tea.

OT. We are currently on "Inspector Lewis" 8th season on Amazon (but not Amazon original). And on 18th season of "Midsommer Murders" (I believe on Netflix). We enjoy watching British depopulate their islands. This is the true meaning of "Brexit".  8)

Edit on topic: We still subscribe to Netflix DVD service. In fact, although clearly neglected by Netflix - the number of old DVDs "not available" continues to balloon - this is clearly a very sticky cash cow (oh no, another OUTR!  ;D ). Just watched "Hidden Figures" on Blu Ray. Great movie.
Title: Re: NFLX - Netflix
Post by: rkbabang on July 14, 2017, 11:17:07 AM
Edit on topic: We still subscribe to Netflix DVD service. In fact, although clearly neglected by Netflix - the number of old DVDs "not available" continues to balloon - this is clearly a very sticky cash cow (oh no, another OUTR!  ;D ). Just watched "Hidden Figures" on Blu Ray. Great movie.

I thought I was the only one who still got DVDs in the mail.  I first joined netflix in 2003 and have been getting DVDs the entire time.  The only changes I've made to the DVD plan is switching from DVD Discs to Blu-ray and downgrading from 3 discs at a time down to 1 at a time.  And sometimes that 1 disc sits around the house for months before we watch it.  We just watched "Snowden" on Blu-ray.  Highly recommended.

Title: Re: NFLX - Netflix
Post by: benchmark on July 14, 2017, 10:17:02 PM

I also loved Sneaky Pete, but haven't yet watched Patriot.  I love both Netflix and Amazon, but what worries me is that as my kids get older they don't seem to watch anything but YouTube.  I've asked them about it and they say that their friends are the same. (11th-12th grades) . I can see them not bothering with cable or netflix when they are out of the house as unnecessary expenses.  And if they decided to subscribe to anything YouTube Red would be first.  Also even when they are out of the house what is to stop my kids from continuing to use my password on the rare occasion they do want to watch Netflix?  I think the demographic trends may be against NFLX.  I've owned the stock in the past, but no longer do.

Good point about youtube, which seems to have become the default for my kids as well. I think that the services that proves to be the most 'convenient' will win, which seems to be Amazon (because you already have prime) and google/youtube (because you are there everyday).
Title: Re: NFLX - Netflix
Post by: JayGatsby on July 14, 2017, 11:53:27 PM
The short argument is that the streaming content development costs are really a recurring expense? If they have to keep investing the same amount in new content while revenue stayed flat net income would pretty quickly go negative.

Surprised they aren't being taxed in more foreign jurisdictions. In Australia Netflix (and the internet in general) have been wreaking havoc on the traditional broadcast industry and the associated broadcast taxes. I assume this is happening elsewhere but have only researched Australia (looked at their broadcasters).
Title: Re: NFLX - Netflix
Post by: benchmark on July 15, 2017, 10:00:04 AM
The short argument is that the streaming content development costs are really a recurring expense? If they have to keep investing the same amount in new content while revenue stayed flat net income would pretty quickly go negative.

They have to keep developing new content to differentiate and keep their subscribers. Besides that, I think that the 'convenience factor' goes against NFLX as well -- Amazon and google/youtube are just too convenient (one less account to remember and manage, etc.)
Title: Re: NFLX - Netflix
Post by: DooDiligence on July 17, 2017, 09:53:34 AM
I really like Sling & would consider all these guys (Netflix, Amazon, etc.) to be super convenient.

I'll go months with very little TV time & have found shutting down services to be dead simple (no hiding behind multiple clicks.)

Sling gets my money more consistently (HGTV, Bloomberg, Comedy Central, El Ray & plenty of sports channels)

Just checked & they've put El Rey in one of the $5 bundles since my last hook up with them (I really like El Rey & it used to be included in the basic $20 service.)

The way they squeeze an extra fiver out of you for extended channels seems smart.
Title: Re: NFLX - Netflix
Post by: Liberty on July 17, 2017, 01:15:10 PM
I'm tempted to short it :)

Hope you didn't end up shorting it:

#BREAKING: Netflix $NFLX Q2 Net Subscriber Additions (Domestic), 1.07M vs. 600,000 guidance
Title: Re: NFLX - Netflix
Post by: atbed on July 17, 2017, 01:24:34 PM
I'm tempted to short it :)

Hope you didn't end up shorting it:

#BREAKING: Netflix $NFLX Q2 Net Subscriber Additions (Domestic), 1.07M vs. 600,000 guidance

and 5.2M global net adds vs. 3.2M guidance. Growth is accelerating

I understand why some of you cancel your membership here and there or don't subscribe at all, but are you the exception or the norm? I think most think of the membership fee this way: it's the cost of a few cups of coffee each month.
Title: Re: NFLX - Netflix
Post by: Jurgis on July 17, 2017, 02:43:02 PM
I guess it indicates how tough it is for early adopters to evaluate company in Main Street (or even international Tornado?)

 8)

(for non GGs, ref: http://boards.fool.com/the-technology-adoption-cycle-talc-14336664.aspx?sort=threaded )
Title: Re: NFLX - Netflix
Post by: Pelagic on July 18, 2017, 08:31:51 AM
I'm tempted to short it :)

Hope you didn't end up shorting it:

#BREAKING: Netflix $NFLX Q2 Net Subscriber Additions (Domestic), 1.07M vs. 600,000 guidance

Any thoughts on what percent of those additions were for one month? I know I renewed my subscription end of May to watch House of Cards and a few other things they added in the May - June period and have since canceled. Surprised Netflix hasn't offered a reduced rate for yearly subscribers to encourage longer term subscription.
Title: Re: NFLX - Netflix
Post by: fareastwarriors on September 15, 2017, 06:04:01 PM
Netflix's Sarandos Aims to Build the Next Great Hollywood Studio

https://www.bloomberg.com/news/articles/2017-09-15/netflix-s-sarandos-aims-to-build-the-next-great-hollywood-studio (https://www.bloomberg.com/news/articles/2017-09-15/netflix-s-sarandos-aims-to-build-the-next-great-hollywood-studio)
Title: Re: NFLX - Netflix
Post by: Liberty on February 21, 2019, 11:15:11 AM
Writeup:

https://traviswiedower.com/2019/02/20/netflix-the-powerful-combination-of-scale-and-network-effects/
Title: Re: NFLX - Netflix
Post by: Liberty on February 26, 2019, 09:01:23 AM
Coho Capital letter, mostly about NFLX:

https://www.dropbox.com/sh/cydtpizoscf5u5f/AADb_IdFxx2ews5da6Hngb8na?dl=0&preview=Coho+Capital+2018+Q4+Shareholder+Letter.pdf
Title: Re: NFLX - Netflix
Post by: Liberty on March 05, 2019, 08:43:47 AM
https://redef.com/original/big-media-isnt-ready-to-fight-back-netflix-misunderstandings-pt-5
Title: Re: NFLX - Netflix
Post by: no_free_lunch on April 30, 2019, 12:25:14 PM
I am thinking of netflix as a short.

There is a lot of competition coming at them.  Apple, Disney, Amazon, HBO, etc..   Meanwhile they are shifting more and more to original content.  Personally I just don't care for what I see on Netflix and am thinking of cancelling it.  Others I have talked to feel the same.  Curious to see others opinion on the board.

Against that backdrop, they are selling for 10x revenues and something like 100x earnings, while their growth rate has slowed.  For current price they don't need to experience subscriber drawdown to crash the stock, I feel they need strong growth just to justify the current price.

I am thinking of this as one part of portfolio protection.   I would like to allocate 1-2% of portfolio to LEAP puts, and this may be one of them.  I know it is far from guaranteed that NFLX drops but I think they could drop more than the average in a decline and I think they could drop despite the market at large. 
Title: Re: NFLX - Netflix
Post by: 5xEBITDA on April 30, 2019, 12:40:12 PM

I am thinking of this as one part of portfolio protection.   I would like to allocate 1-2% of portfolio to LEAP puts, and this may be one of them.  I know it is far from guaranteed that NFLX drops but I think they could drop more than the average in a decline and I think they could drop despite the market at large.

Sounds like a lot of uncertainty and headache for a small portfolio position that would ultimately have negligible impact on your results event if the short worked out very well.
Title: Re: NFLX - Netflix
Post by: rkbabang on April 30, 2019, 12:48:17 PM
I love Netflix and won't be cancelling it, but the price does seem more than a bit rich right now.  My only caution would be that I think they have the ability to raise prices more than they have.  Enough to justify the current price?  I don't know.  And I see Amazon, HBO, DIS+ as complements to NFLX rather than replacements.  You can subscribe to all of them, cancel cable, and still save a significant amount of money every month. 
Title: Re: NFLX - Netflix
Post by: bizaro86 on April 30, 2019, 01:44:26 PM
Yeah, I am not long netflix, but wouldn't consider shorting it. The math for growth is really compelling here, especially because price increases and member growth have a multiplicative effect. So I think they can get significant revenue growth for years in a business where a significant portion of the costs are fixed, so operating leverage should be very high. A business like that deserves to trade a very high multiple...
Title: Re: NFLX - Netflix
Post by: johnny on April 30, 2019, 03:35:05 PM
I don't think Netflix has all that much more room on pricing per se.

I think the real danger for a short thesis is that Netflix still has the ability to bring down the account sharing hammer. My entire family shares my Netflix account, and this is like ~4 distance physical residences. If they tried to tell me I needed to pay $30 a month I'd tell them to get lost, but if they figured out some way to keep my sisters and parents off my account and hit each of them up for $10, I'm sure they'd all cave.
Title: Re: NFLX - Netflix
Post by: bizaro86 on April 30, 2019, 04:59:08 PM
I don't think Netflix has all that much more room on pricing per se.

I think the real danger for a short thesis is that Netflix still has the ability to bring down the account sharing hammer. My entire family shares my Netflix account, and this is like ~4 distance physical residences. If they tried to tell me I needed to pay $30 a month I'd tell them to get lost, but if they figured out some way to keep my sisters and parents off my account and hit each of them up for $10, I'm sure they'd all cave.

They won't raise to $30. They'll raise it $1/year for the next 10 years.
Title: Re: NFLX - Netflix
Post by: LongTermView on April 30, 2019, 08:32:07 PM
I am thinking of netflix as a short.

There is a lot of competition coming at them.  Apple, Disney, Amazon, HBO, etc..   

That kind of sounds like this https://seekingalpha.com/article/242320-whitney-tilson-why-were-short-netflix 2010 article where Whitney Tilson explained why he was short at the time:
Quote
It does have a brand name and 16.9 million customers, but Netflix's brand and number of customers pale in comparison to its new, direct competitors like Apple (iTunes), Google (NASDAQ:GOOG) (YouTube), Amazon.com (NASDAQ:AMZN) (Amazon Video on Demand), Disney (NYSE:DIS) and News Corp. (NASDAQ:NWS) (part ownership of Hulu), Time Warner (TWX, TWC) (cable, HBO, etc.), Comcast (NASDAQ:CMCSA) (cable, NBC Universal, part ownership of Hulu), and Coinstar's Redbox (NASDAQ:CSTR) (30,000 kiosks renting DVDs for $1/night and email addresses for 21 million customers).

In short, Netflix is moving from a business in which it was competing against smaller, dying, heavily-indebted companies with inferior business models to some of the largest, most powerful, aggressive and deep-pocketed companies in the world, which have big competitive advantages over Netflix.

Disclosure: I'm long nflx.
Title: Re: NFLX - Netflix
Post by: dwy000 on April 30, 2019, 09:55:04 PM
I am thinking of netflix as a short.

There is a lot of competition coming at them.  Apple, Disney, Amazon, HBO, etc..   

That kind of sounds like this https://seekingalpha.com/article/242320-whitney-tilson-why-were-short-netflix 2010 article where Whitney Tilson explained why he was short at the time:
Quote
It does have a brand name and 16.9 million customers, but Netflix's brand and number of customers pale in comparison to its new, direct competitors like Apple (iTunes), Google (NASDAQ:GOOG) (YouTube), Amazon.com (NASDAQ:AMZN) (Amazon Video on Demand), Disney (NYSE:DIS) and News Corp. (NASDAQ:NWS) (part ownership of Hulu), Time Warner (TWX, TWC) (cable, HBO, etc.), Comcast (NASDAQ:CMCSA) (cable, NBC Universal, part ownership of Hulu), and Coinstar's Redbox (NASDAQ:CSTR) (30,000 kiosks renting DVDs for $1/night and email addresses for 21 million customers).

In short, Netflix is moving from a business in which it was competing against smaller, dying, heavily-indebted companies with inferior business models to some of the largest, most powerful, aggressive and deep-pocketed companies in the world, which have big competitive advantages over Netflix.

Disclosure: I'm long nflx.

I'd never short a momentum stock but why do you feel it is a long here?  Not why is it a great product or business but why is $370/share a cheap price to pay?
Title: Re: NFLX - Netflix
Post by: LongTermView on April 30, 2019, 10:25:40 PM
I'd never short a momentum stock but why do you feel it is a long here? 
They have 149 million global streaming paid memberships. Spreading the cost of content out to this many customers allows them to easily outspend competitors. Once they reach a more steady state then the per-share economics will be rewarding imo.


Not why is it a great product or business but why is $370/share a cheap price to pay?
I just chimed in because the short thesis sounded familiar from what was said in 2010 and the stock has gone up quite a bit since that time. It wouldn't be right to chime in without disclosing my position. I'm still long but I bought it at a lower price than $370. For me it isn't so much that $370/share is a "cheap price" to pay, I see it more as a wonderful business at a price that isn't unreasonable.
Title: Re: NFLX - Netflix
Post by: Liberty on May 06, 2019, 11:18:31 AM
Good stuff as usual by Matt Ball:

https://redef.com/original/quality-is-a-distraction-if-it-exists-at-all-netflix-misunderstandings-pt-6

https://redef.com/original/netflix-is-resilient-because-its-rarely-competing-netflix-misunderstandings-pt-7

Title: Re: NFLX - Netflix
Post by: glorysk87 on May 06, 2019, 11:48:41 AM
I'd never short a momentum stock but why do you feel it is a long here? 
They have 149 million global streaming paid memberships. Spreading the cost of content out to this many customers allows them to easily outspend competitors. Once they reach a more steady state then the per-share economics will be rewarding imo.


Not why is it a great product or business but why is $370/share a cheap price to pay?
I just chimed in because the short thesis sounded familiar from what was said in 2010 and the stock has gone up quite a bit since that time. It wouldn't be right to chime in without disclosing my position. I'm still long but I bought it at a lower price than $370. For me it isn't so much that $370/share is a "cheap price" to pay, I see it more as a wonderful business at a price that isn't unreasonable.

What do you consider steady state? Said another way, what scale do you think they need to achieve to generate "rewarding per-share economics"?
Title: Re: NFLX - Netflix
Post by: LongTermView on May 06, 2019, 12:06:52 PM
What do you consider steady state? Said another way, what scale do you think they need to achieve to generate "rewarding per-share economics"?

I don't know, I think of Coca-Cola as being steady-state now. They're not everywhere but they've covered much of the planet. Netflix has a ways to go imo. I'm betting that when their annual paid subscriber growth slows to 10% or less then the bottom line economics will be rewarding on a per-share basis.
Title: Re: NFLX - Netflix
Post by: Liberty on May 13, 2019, 07:42:16 AM
That's funny:

https://www.wsj.com/articles/farmers-plow-through-movies-while-plowing-fields-11557508393
Title: Re: NFLX - Netflix
Post by: Liberty on June 25, 2019, 07:23:04 AM
https://deadline.com/2019/06/netflix-ted-sarandos-weighs-in-on-streaming-wars-agency-production-big-tech-breakups-ma-outlook-1202636595/
Title: Re: NFLX - Netflix
Post by: Liberty on July 11, 2019, 06:44:36 AM
Barry Diller interview in Sun Valley:

https://www.cnbc.com/video/2019/07/10/media-legend-barry-diller-dont-know-who-is-going-to-win-the-streaming-wars.html
Title: Re: NFLX - Netflix
Post by: jschembs on July 17, 2019, 02:59:21 PM
Can't remember the last time NFLX lost domestic subs (Qwikster?). I'm sure they'll get asked the tough questions on the conference call by their hand-picked interviewer.
Title: Re: NFLX - Netflix
Post by: Liberty on July 17, 2019, 04:02:02 PM
As Matt Ball says:

"Odds are if Stranger Things came out a week earlier, there'd be no loss, but a very different narrative.

Not that anything would be different (in a good or bad way)"

https://twitter.com/ballmatthew/status/1151595230820478977
Title: Re: NFLX - Netflix
Post by: Gregmal on September 20, 2019, 07:36:59 AM
Is this not one of the most obvious shorts right now?

First, market cap severely limits pool of potential acquirers.

Next, you've got cut throat competition with now formidable foes going live.

Some of these same folks hold some very valuable content that would likely put Netflix at a disadvantage. Further, for third party content the cost of acquiring this will likely only be driven up.

What's left? NFLX will have to piss away TONS of money on original content or pay top dollar for existing stuff.

Is NFLX really cheap anymore? They've raised prices so much they're basically on par with HBO and only a couple bucks less then some streaming options for live TV.

What sub growth is really left? Everyone I know agrees NFLX has gotten pretty stale. Numbers last Q to me were an obvious sign of a broken growth story. Heck, this even got the proverbial and ceremonious VIC writeup recently. Something I've noticed is another sign of the shift; when growth dies, and prematurely jumping in are "value" folks...still paying 100x earnings.
Title: Re: NFLX - Netflix
Post by: cameronfen on September 20, 2019, 02:25:53 PM
Is this not one of the most obvious shorts right now?

First, market cap severely limits pool of potential acquirers.

Next, you've got cut throat competition with now formidable foes going live.

Some of these same folks hold some very valuable content that would likely put Netflix at a disadvantage. Further, for third party content the cost of acquiring this will likely only be driven up.

What's left? NFLX will have to piss away TONS of money on original content or pay top dollar for existing stuff.

Is NFLX really cheap anymore? They've raised prices so much they're basically on par with HBO and only a couple bucks less then some streaming options for live TV.

What sub growth is really left? Everyone I know agrees NFLX has gotten pretty stale. Numbers last Q to me were an obvious sign of a broken growth story. Heck, this even got the proverbial and ceremonious VIC writeup recently. Something I've noticed is another sign of the shift; when growth dies, and prematurely jumping in are "value" folks...still paying 100x earnings.

I agree that this is more of a short than a long, but 10 to 15 dollars a month and running out of pricing power?  Compared to cable its still got way more pricing power and probably of equivalent or slightly poorer quality.  Compared to other current services like HBO, Hulu etc., is much superior in terms of quality.   
Title: Re: NFLX - Netflix
Post by: Spekulatius on September 20, 2019, 03:06:41 PM
Pricing power is more limited the thought, as the recent quarter seems to indicate. Also, new entrants like Disney and Comcast seem to be pricing their streaming services low, so that will restrict pricing power even more. Of course they have international growth, but everywhere but the US, TV tends to be way cheaper, so I am not sure how much profit margin they can generate. Using Aswath Damodaranís valuation spreadsheet, I need dramatic increases in ARPU to justify more than $200/ share in value. The stock seems way to expensive any way I look at this. Also, their Cash flow statement looks worse than their income statement because their capitalize their content cost, so they keep adding to their debt. FWIW, Itís not an great looking operating model, as far as balance sheet and cash flow statement are concerned.
Title: Re: NFLX - Netflix
Post by: Gregmal on September 20, 2019, 04:46:57 PM
Yea I just dont see huge tolerance for price increases anymore as there are more legitimate alternatives now than ever before, whereas previously this was as simple as "I'm cutting cable and getting Netflix". Youtube I'd say is easily superior and has massive potential. Then the usual candidates like Hulu, plus now the new entrants like DIS and AAPL. So add in all of this and the assumption that content becomes harder/more expensive to acquire which will in turn lead to a lower quality catalogue...and yea, I can't see people continue to put up with prices hikes like they've been doing previously.

The numbers last quarter were atrocious. I was further surprised to see how much debt they've racked up as well as its been a while since I looked at it after owning it a long time ago. Things will get more expensive all around, while pricing IMO is capped, with customers becoming harder to acquire...and harder to keep. $200 is generous.
Title: Re: NFLX - Netflix
Post by: thepupil on September 20, 2019, 07:19:08 PM
Let me be clear, I will never own or short this.

I would on the other hand totally pay $50/month for Netflix.
Title: Re: NFLX - Netflix
Post by: RuleNumberOne on September 20, 2019, 07:25:25 PM
All that we need to understand from John Malone, is the self-reinforcing effect:

   buying scale => cheaper and broader content => more subscribers => more buying scale.

Netflix has 60m US subscribers. From what I remember, Comcast and DirecTV had around 20-24m subscribers and were the next two largest. Comcast at around < 24m subscribers had enough power to get a "MFP" clause - content owners had to give Comcast the lowest price.

Netflix has unmatched scale in buying power. Also unmatched knowledge of what their customers want to watch, therefore exactly how much to pay for what content.

Apple streaming and Disney+ are both 'upcoming'. It will take a while for people to realize that Apple is not getting anywhere and Netflix is not getting hurt. I am not invested in Netflix, just a John Malone fan. Netflix debt is very low compared to the lifetime value of their US consumers.
Title: Re: NFLX - Netflix
Post by: Gregmal on September 20, 2019, 08:55:28 PM
Well sure. Traditional media scale and content is not equal to what Netflix is. If Netlix stops adding new content the majority of their subs will leave. Especially if you keep raising prices. Comcast and DTV at least have live and consistently new and original/desirable, content. NFLX does not without spending more money. The fact that their competitors(ATT owns DTV and also has WB+HBO for instance, DIS has 21 Century Fox) can either cut them out completely or extort them is problematic.

I agree the AAPL product will be garbage. The point is, AAPL which has been slow AF to bring anything new to market now is launching streaming. So are others. This is just more competition for Netflix. If some of the staples in the traditional space have seen huge declines in their value ascribed by the customer(and Mr. Market) it is naive to think NFLX would be an exception. Frankly, given how large the gap is between pay TV packages like Comcast and Atice vs NFLX, there's a case to be made that this is where they should be at near peak earnings. Instead they trade and 100x or whatever and guess what...after years and years of fighting fate and sucking out profits from the traditional model(FWIW this is where autos are going as well IMO), now the big boys are coming for this space and undercutting them...but yea...they'll raise prices...without adding content/increasing spend, and their direct competitors will just continue to give them content....

Like I said, easy short here IMO, although perhaps I'm wrong. But what exactly are people even betting on here? That this is a $250B company? $500B? LOL WTF??? At those valuations you're basically betting on what? That they own 90% market share for all TV after finding a way to incorporate advertising revenue? With NO live content? No sports? This isn't a winner take all market and the comparisons to the dynamics of old cable are just as shoddy and the logic used by the big boys to put off dealing with NFLX for so long. It all comes down to content and if it were just about pricing then HULU would reign supreme.

Being long is basically assuming they are the most valuable media/content provider in the history of the world. That their current market share of 60M subs or IDK like >50% US market share of all people with a tv will increase to 60%? While every established player with ownership of better content and more resources just sits there and lets it happen?
Title: Re: NFLX - Netflix
Post by: Cardboard on September 21, 2019, 02:44:39 AM
Hastings agree with Gregmal:

https://www.cnbc.com/amp/2019/09/20/netflix-ceo-hastings-tough-competition-from-apple-disney-coming.html
Title: Re: NFLX - Netflix
Post by: UK on September 22, 2019, 01:59:49 AM
So content prices/bloodbath as Malone says, etc, but one more risk for NFLX, as a stand alone player:

"At its event Tuesday used mainly to showcase this yearís new devices, Apple also announced pricing and launch details for its TV+ offering. The service will launch on Nov. 1 for $4.99 a month, though a year of it will be included free for anyone buying a new iPhone, iPad, Apple TV, Mac or iPod Touch."

"Comcast Corp. is making its streaming device available free of charge to its internet-only customers, in an effort to capitalize on its expanding broadband customer base as the battle for streaming customers ramps up."

AMZN video for prime members etc.

So what implications for NFLX (or any other old media company) will be if more and more of video content will become a free product in order to subsidize other things for AMZN/AAPL/GOOG/ATT/etc?

Title: Re: NFLX - Netflix
Post by: cameronfen on September 22, 2019, 07:24:49 AM
So content prices/bloodbath as Malone says, etc, but one more risk for NFLX, as a stand alone player:

"At its event Tuesday used mainly to showcase this yearís new devices, Apple also announced pricing and launch details for its TV+ offering. The service will launch on Nov. 1 for $4.99 a month, though a year of it will be included free for anyone buying a new iPhone, iPad, Apple TV, Mac or iPod Touch."

"Comcast Corp. is making its streaming device available free of charge to its internet-only customers, in an effort to capitalize on its expanding broadband customer base as the battle for streaming customers ramps up."

AMZN video for prime members etc.

So what implications for NFLX (or any other old media company) will be if more and more of video content will become a free product in order to subsidize other things for AMZN/AAPL/GOOG/ATT/etc?

So I think about this often especially in the context of Amazon as they enter more verticals Prime becomes a more potent bundle.  But I think the origional free streaming service package was Tmobile offering Netflix for eligible customers.  Obviously Tmobile doesn't own Netflix, but a lot of these deals are a response to Tmobiles marketing innovation as soon afterword Att offered like hulu, spotify offered hulu etc.  I think this deal capitalizes on the fact that a lot of streamers get more than 10-15 dollars a month of value from Netflix and would pay more which makes this partnership attractive.  I do not know whether the new competitive landscape will change things at least from a supply perspective. 
Title: Re: NFLX - Netflix
Post by: Foreign Tuffett on September 22, 2019, 11:08:28 AM
Let's step back from the fray a little bit and look at the big picture: Video content has gotten much less expensive for consumers over time. This trend seems to be accelerating.

20 years ago if you wanted to watch video content you could:
1) buy a movie ticket
2) rent a DVD
3) subscribe to a cable or satellite TV service
4) Buy a "bunny ears" antenna to try and pick up a handful of local stations

Think about the situation today in 2019. 1 - 4 still exist:
1) De Facto price cut via AMC A-List
2) De Facto price cut via Redbox and the various digital rental services
3) I don't know enough about cable and satellite TV to comment on how pricing has changed over time
4) Video quality and user friendliness has improved over time since (I think) in most places the signals are now digital

You also have all this other stuff:
5) YouTube and Twitch are free
6) Apple TV+ will be more-or-less free, given how many people buy 1+ Apple devices per year ("Through Family Sharing, up to six family members can share one Apple TV+ subscription")
7) Amazon Prime Video is more-or-less free, given how many people are going to subscribe to Amazon Prime whether Prime Video exists or not
8 Disney+, Hulu, and ESPN+ bundle will cost only $13 per month
9) Netflix is only $13 per month.
10) I'm not endorsing or recommending this since it's illegal, but millions of people use torrents and streaming sites to obtain content video content for free

If you add up #4 - 9 (let's ignore #10), that is a huge amount of content for (in effect) only $26 per month.

All this makes me think that I don't want to be involved anywhere in this ecosystem unless I am very confident that I'm betting on a long term winner with pricing power. Hard to be confident of that when things are changing so rapidly.
Title: Re: NFLX - Netflix
Post by: Jurgis on September 22, 2019, 05:47:34 PM
"Comcast Corp. is making its streaming device available free of charge to its internet-only customers, in an effort to capitalize on its expanding broadband customer base as the battle for streaming customers ramps up."

They are making device free. Not content.
Title: Re: NFLX - Netflix
Post by: UK on September 22, 2019, 08:35:58 PM
https://www.wsj.com/articles/comcasts-peacock-becomes-latest-entrant-in-streaming-scramble-11568725206

In an effort to navigate these choppy waters, Peacock is expected to be available free to Comcastís more than 21 million cable subscribers in the U.S. In addition, Comcast and NBCUniversal are also looking to strike deals with other American pay-TV providers that would allow them to offer Peacock to their subscribers free as well, a person familiar with the matter said.
Title: Re: NFLX - Netflix
Post by: Spekulatius on September 23, 2019, 04:05:15 AM
https://www.wsj.com/articles/comcasts-peacock-becomes-latest-entrant-in-streaming-scramble-11568725206

In an effort to navigate these choppy waters, Peacock is expected to be available free to Comcastís more than 21 million cable subscribers in the U.S. In addition, Comcast and NBCUniversal are also looking to strike deals with other American pay-TV providers that would allow them to offer Peacock to their subscribers free as well, a person familiar with the matter said.

Again, it sounds like it is free to cable TV subscribers (implying that you still pay for the content,  itís just a different delivery) and not for broadband subscribers. Their video subscribers # from last quarter were 21.6M (and are falling), which about matches the number given above. BB subscribers are higher and about 25M (and moving higher).

Linear TV quickly moves to streaming as the default delivery option. This is great for the ca let providers and customers because the hardware for streaming is now cheap (way cheaper than setup boxes) and easier to setup (no tech visit necessary), and set up is mostly self help.
Title: Re: NFLX - Netflix
Post by: UK on September 28, 2019, 05:30:15 AM
Ok, thank you, so maybe with Comcast it is not free and a big threat, but, again:

"Apple has tried to counter its shallower offering by undercutting rivals on price. TV+ will cost $4.99 a month, less than the $6.99 that Disney plans to charge for Disney+ and a fraction of the price of Netflixís fee of $12.99. The iPhone maker can afford to discount the service because of the profits it earns on hardware and its ability to distribute across the more than 1.4 billion active devices it has world-wide."

How Netflix or many other old media companies could be impacted by such things?
Title: Re: NFLX - Netflix
Post by: DooDiligence on September 28, 2019, 07:02:22 AM
If Apple & Disney were to combine, I think the rest of them would be in even bigger trouble.
Title: Re: NFLX - Netflix
Post by: Gregmal on November 01, 2019, 05:08:12 PM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...
Title: Re: NFLX - Netflix
Post by: Spekulatius on November 01, 2019, 05:19:04 PM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...

I donít own NFLX, but I am customer and think neither Disney + nor Peacock is real competition. The only real competition for NFLX right now is Amazon video. It would consider NFLX as a long of they were FCF positive, but they arenít - they use $3B in cash annually right now. They do gain a lot of customer and it is sort of understandable , since they need to pay for content upfront, but I would rather stick with business models that generate FCF and can grow at the same time. NFLX right now canít, but I donít think itís a great short either.
Title: Re: NFLX - Netflix
Post by: Gregmal on November 01, 2019, 05:28:44 PM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...

I donít own NFLX, but I am customer and think neither Disney + nor Peacock is real competition. The only real competition for NFLX right now is Amazon video. It would consider NFLX as a long of they were FCF positive, but they arenít - they use $3B in cash annually right now. They do gain a lot of customer and it is sort of understandable , since they need to pay for content upfront, but I would rather stick with business models that generate FCF and can grow at the same time. NFLX right now canít, but I donít think itís a great short either.

You've mentioned your concerns on MSGN, but for the sake of some Friday night chat, you have any thoughts on SBGI or FOX? Im digging around in those and they look good so far. Recent piece on CNBC(I forget exactly when) basically stated sports and live TV would soon pivot to being a desired asset to streaming co's. Those two kind of own that space.
Title: Re: NFLX - Netflix
Post by: Spekulatius on November 01, 2019, 05:55:55 PM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...


I donít own NFLX, but I am customer and think neither Disney + nor Peacock is real competition. The only real competition for NFLX right now is Amazon video. It would consider NFLX as a long of they were FCF positive, but they arenít - they use $3B in cash annually right now. They do gain a lot of customer and it is sort of understandable , since they need to pay for content upfront, but I would rather stick with business models that generate FCF and can grow at the same time. NFLX right now canít, but I donít think itís a great short either.

You've mentioned your concerns on MSGN, but for the sake of some Friday night chat, you have any thoughts on SBGI or FOX? Im digging around in those and they look good so far. Recent piece on CNBC(I forget exactly when) basically stated sports and live TV would soon pivot to being a desired asset to streaming co's. Those two kind of own that space.

I own FOX so I obviously like it. Great balance sheet and franchise and pure live content means that Netflix is not a competitor. And there are no issue with capitalizing content so FCF ~ earnings, unlike CBS for example. Switching the delivery to live streaming may actually be a positive for FOX in the long run. Ai have no opinion on SBGI, just havenít looked at it closely.
Title: Re: NFLX - Netflix
Post by: DTEJD1997 on November 01, 2019, 05:57:14 PM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...

I donít own NFLX, but I am customer and think neither Disney + nor Peacock is real competition. The only real competition for NFLX right now is Amazon video. It would consider NFLX as a long of they were FCF positive, but they arenít - they use $3B in cash annually right now. They do gain a lot of customer and it is sort of understandable , since they need to pay for content upfront, but I would rather stick with business models that generate FCF and can grow at the same time. NFLX right now canít, but I donít think itís a great short either.

I would argue that HULU is a competitor.  I used to subscribe...cancelled it when I watched most of the shows that I wanted.

I currently subscribe to Netflix.  Might cancel that also, as I've seen most of my favorites.  Netflix has a TON of stuff...most of bad or marginal at best.

I'm finding that I'm spending more & more of my time watching unique content on the YouTube.
Title: Re: NFLX - Netflix
Post by: Spekulatius on November 01, 2019, 06:10:28 PM
^ Yeah, I would be careful to assign customer lifetime values to something that can be cancelled and restarted at a moments notice. This isnít some ERP software that running a companies transactional backbone or a LT contractual lock-in.

And yes, Hulu and Roku are competitors.
Title: Re: NFLX - Netflix
Post by: dwy000 on November 02, 2019, 09:13:05 AM
https://seekingalpha.com/news/3513163-ad-supported-peacock-streaming-may-come-free-cnbc

Yup, no competitions concerns here. Just keep raising prices and signing up international accounts...

I donít own NFLX, but I am customer and think neither Disney + nor Peacock is real competition. The only real competition for NFLX right now is Amazon video. It would consider NFLX as a long of they were FCF positive, but they arenít - they use $3B in cash annually right now. They do gain a lot of customer and it is sort of understandable , since they need to pay for content upfront, but I would rather stick with business models that generate FCF and can grow at the same time. NFLX right now canít, but I donít think itís a great short either.

You've mentioned your concerns on MSGN, but for the sake of some Friday night chat, you have any thoughts on SBGI or FOX? Im digging around in those and they look good so far. Recent piece on CNBC(I forget exactly when) basically stated sports and live TV would soon pivot to being a desired asset to streaming co's. Those two kind of own that space.

I am long SBGI.  I like the local news and sports content which is unreplicsble by any of the streaming services. Basically live TV.  Sports speaks for itself.  Local content, I believe, is firmly undervalued. With newspapers in severe decline there really is no place to get local content other than the local networks. 

The company is trading at less than 4x free cash flow (not operating cash flow, free cash).  Very levered after the Fox Sports acquisition but actually low by historical standards for TV.  The breadth of geographic content and sports "must have" content gives them huge negotiating leverage with cable and OTT carriage. 

Throw in the fact that this election cycle will be bigger and start sooner than ever in history (apparently Trump spent 7 figures on the world series final alone - more than a year ahead of election).  Bodes well. 
Title: Re: NFLX - Netflix
Post by: cherzeca on November 02, 2019, 09:22:01 AM
@dwy

I was thinking about SBGI in connection with this coming year's election advertising...could be a significant delta in revs and while the market discounts ahead, there is alway market movement based upon reported earnings when they are good (or bad).  I was thinking there will be not much  advertising bump for outlets like fox/cnn/msnbc because their programming is essentially political advertising.  do you see anybody other than SBGI getting a boost from election year advertising?
Title: Re: NFLX - Netflix
Post by: Liberty on November 02, 2019, 10:34:33 AM
Down below 80 pre mt, which will be around 19x LTM EPS. Dare I think a  buy at these levels? 19x earning??? Tech would pay 19x sales for this thing.

I won't invest based on it, but I'd say big tech is taking a close look at 19x.

Was just curious what the return would've been if someone had bought when this first post was posted.

About 1,615% in about 8 years, or 41.59% CAGR.
Title: Re: NFLX - Netflix
Post by: Jurgis on November 02, 2019, 10:51:09 AM
Down below 80 pre mt, which will be around 19x LTM EPS. Dare I think a  buy at these levels? 19x earning??? Tech would pay 19x sales for this thing.

I won't invest based on it, but I'd say big tech is taking a close look at 19x.

Was just curious what the return would've been if someone had bought when this first post was posted.

About 1,615% in about 8 years, or 41.59% CAGR.

Bought 10/11/2012, cost basis per share $9.44, +2,938.40% return.

On a beer size position.  :'(
Title: Re: NFLX - Netflix
Post by: Liberty on November 02, 2019, 12:03:44 PM
Bought 10/11/2012, cost basis per share $9.44, +2,938.40% return.

On a beer size position.  :'(

Well, you went from a beer to a good single malt. Not bad.
Title: Re: NFLX - Netflix
Post by: Liberty on November 06, 2019, 04:10:43 PM
Reed Hastings interview (30-mins)  at New York Times DealBook Conference – 11/6/2019:

https://www.youtube.com/watch?v=8oVl3gyIaeI
Title: Re: NFLX - Netflix
Post by: chrispy on November 08, 2019, 04:35:21 AM
Has the video been taken down?