Netflix right Can $ 88 senior content fresh

Paying more for content will be poorly

Netflix causes costs to keep its catalogue content fresh and updated jour.Frais acquisition content (% of revenues) are slightly on the rise of 14% in 2006 to 17% in 2007 [1], as a result of content acquired titles and the average acquisition cost attends a slight increase as well.

Since 2007, costs have decreased steadily and we expect to stabilize around 13 %.Cette decline is due to a more rapid growth in revenues to offset the costs of acquiring contenu.Il is a good tendency for Netflix, but it cannot persist if of Netflix subscriber growth (and therefore revenue growth) slows down.

We currently have a Trefis estimate of $ 88 for stock of the Netflix Prize, approximately 45% lower than the current market of $155.

Costs for the acquisition of content consist of costs incurred by Netflix to get the contents of the studios, distributors and other suppliers through direct purchases, licence.Netflix agreements and revenue-sharing agreements can afford to reduce the number of titles, it acquires in the competitive environment in the media industry.

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Netflix is in competition with cable and satellite providers like Time Warner Cable, Comcast, Dish Network, DirecTV and video rentals as Redbox.

Cable companies like Time Warner Cable and Comcast services video on demand that compete with DVD delivery and services at the request of Netflix.If these services to slow the growth of the Subscriber for Netflix, it could have a negative impact on the margins of society if Netflix content acquisition costs growth should exceed the revenue growth.

Member Trefis content acquisition cost forecasts average (% of income) indicate an increase of 14% in 2010 to 14.3% by 2016, to flat baseline Trefis estimate approximately 13% to Trefis forecast période.Les member estimates imply a decrease of 2% for estimating price Trefis for stock of the Netflix.

You can drag the forecast trend-line above to express your own views and see the sensitivity of Netflix stock costs for the acquisition of content (in % of revenues).

Our comprehensive stock of the Netflix is here.

Notes:

1 Content (in % of revenues) acquisition cost is calculated as: acquisition of content cost revenus.Nous believe that content acquisition costs to advice in business annual dry deposition.

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