HomeTrending EquitiesWhy has Netflix (NFLX) experienced growth in the past year?

Why has Netflix (NFLX) experienced growth in the past year?

In 2020, global demand for streaming services will boom beyond doubt. Netflix (NFLX) is one of the biggest beneficiaries, and investors and analysts are sizing up what will happen in the streaming services industry in 2021 as we return from quarantine.

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Looking at Netflix’s quarterly report – it was better than expected, and the Netflix’s  latest annual report reports that it has a positive cash flow of $ 1.9 billion by the end of 2020, which is a record. Netflix’s share price last year was up 64% as a result of adding 36 million subscribers in 2020, and the Netflix’s now has 204 million subscribers.

Netflix had announced 8.5 million new global subscribers in the fourth quarter, but it only expects to have 6 million in the current quarter. Despite this, market analysts believe that Netflix will continue to grow rapidly in 2021, citing different factors for its profits and stock growth.

Netflix will limit the sharing of passwords

Recently, Netflix just stated that if you live apart from the account owner, you will need a new account to continue using the service.

In a study by Magid Research, 33% of users say they share their Netflix passwords. There could be at least 67 million free viewers, with 204 million paying subscribers. In the case of Netflix’s most popular package, you spend $ 14 a month, which means it can lose over $ 11 billion a year in revenue.

Typically only subscribers with a paid subscription will be able to stream Netflix videos. Upon signing up, Netflix will send you a verification code through email. According to Netflix, the NFLX stock wants to ensure that users have an eligible Netflix account. Subscribers’ numbers can be increased via these measures, increasing Netflix’s revenue.

Netflix will license some of its older productions

Content licensing is a tried and tested method of making money. This time though, it’s about Netflix’s content. Other streaming services have offered some of Netflix’s original content, but other studios were produced that retains the right to license them to Netflix in the future.

Although Netflix-produced content traditionally stayed on the Netflix network, according to a report in The Information, the streaming giant is considering licensing some of its older films and television shows with Peacock (CMCSA), ViacomCBS (VIAC), and others.

Moreover, the licensing fees paid will earn Netflix more revenue, but it will also help attract paid viewers since they can see its offerings.

Cheap mobile subscriptions may benefit Netflix 

Netflix has launched a cheaper “mobile” version of its service in several countries, including India, in 2019. Users can watch on their mobile devices (smartphone or tablet) with standard streaming quality. A successful launch on mobile-enabled Netflix to “increase their audience and expand its business.”

Several recent studies indicate that Netflix’s business revenues in India could double in fiscal 2020, increasing the number of paid subscribers almost threefold. In India, Netflix produces exclusive content to provide competition for Hotstar, Amazon Prime Video, YouTube, and other local players in the market.

Netflix stated in its January report that it does not need outside financing for day-to-day activities since it has an $8.2 billion cash balance and a $750 million unused credit line.

This means that Netflix is in the position to fully focus on its core business – producing creative content for its global audience. Netflix is thus demonstrating the value the Netflix provides to long-term investors.

Edward Bosworth
Edward Bosworth
I am not the run of the mill investigator. I have interesting abilities, sharpened by long stretches of fruitful Mergers and Acquisition achievements, to discover thrashed stocks that have the potential for recuperation and development. These organizations are useful in adjusting a portfolio just as beating the market. This experience left with solid thankfulness for principal investigation of an organization’s organizations instead of the entire partnership, to discover what will drive the outcomes.


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