Saturday, March 12, 2011

Are Netflix's International Ambitions Justified and Achievable?

Trefis submits:

Netflix (NASDAQ:NFLX) is an online movie rental company that operates with a two delivery methods: DVD shipments and online streaming. The shift to online streaming is growing in popularity and is evident as DVD shipped per subscriber is declining. More than one third of new subscribers are now going for streaming-only service, and Netflix is aggressively beefing up available content to attract new users. Netflix?s growth will come from increasing its subscription base, and we believe that Netflix will look to international markets as a core element to its growth plans (beyond Canada). Although Netflix?s business model is unique, it still competes with Apple?s (NASDAQ:AAPL) iTunes, Hulu, VoD services from pay-TV providers like Comcast (NASDAQ:CMCSA), Time Warner Cable (NYSE:TWC) and others.

Our price estimate for Netflix stands at $119, which is well below the current market price of around $200. The discrepancy primarily results from our belief that Netflix may

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