Thursday, May 29, 2014

Netflix: Growth In The Midst Of Increasing Competition

This article was originally published by Seeking Alpha on May 21, 2014

By Sarfaraz A. Khan. Research Asst. Gohar Yousuf 
Netflix is working to improve the quality of its service to domestic subscribers. The company is nearing a major milestone in the international markets. However, Netflix is facing increasing competition from the new entrants in this industry, particularly from Yahoo but the former still has an edge over others.

Netflix (NFLX), the world's biggest internet television network, continues to add millions of new subscribers in each quarter, despite the increasing threat coming from competitors.
The company is working to improve the quality of its services at home while it is nearing profitability in its international operations in the near future.

Improving Streaming Quality

In the first quarter, Netflix added 2.25 million new subscribers in the U.S, taking the total number of streaming subscribers to 35.67 million, of which 96% are paid members. The company's domestic streaming revenues climbed 25% from last year to $799 million while contribution margin increased to 25.2% from 20.6% last year.

Netflix is working to improve the speed and quality of its services to its growing pool of domestic subscribers. The company has signed deals with two of the leading internet service providers, Verizon Communications (VZ) and Comcast Corporation (CMCSA).
For subscribers, so far, the results of these deals have been mixed. According to Netflix's ISP Speed Index, in April, Comcast's streaming speed increased by 31% from April, last year but on the other hand, Verizon's FiOS and DSL subscribers witnessed an 8.3% and 24% drops in streaming speeds. This is shown in the picture below. .. read full article at Seeking Alpha