Post by The Big Daddy C-Master on Aug 17, 2015 5:27:04 GMT -5
www.investopedia.com/articles/markets/081315/netflix-will-soon-be-worth-more-direct-tv.asp?utm_source=newstouse&utm_medium=email&utm_campaign=NTU-8/17/2015
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Netflix Inc. (NFLX) is a provider of on-demand Internet streaming media, such as movies and TV shows. For a flat monthly subscription, users of Netflix can access the company's entire library of media, including its original content. The company has completely disrupted the TV industry.
DirectTV, on the other hand, is an American direct broadcast satellite service that broadcasts the type of media that can be watched directly on television. As of July 2015, the company is a subsidiary of AT&T (T).
With both companies offering video media to users across the globe, it's natural that they would start competing if the younger Netflix company ever reached a size large enough to threaten DirectTV. With the meteoric rise of Netflix over the past five years, the company has reached a point where it will be worth more than DirectTV.
Now that DirectTV is a subsidiary of AT&T, however, Netflix is measured on specific drivers that make it more popular with consumers than DirectTV, rather than on market cap.
ON-DEMAND SERVICE PROVIDER
The number one reason why Netflix has found so much success is because it came to the market as the only provider of video media that allowed a user to watch its entire library of streaming media at any time.
Many companies, DirectTV included, either didn't have the technology, the speed of implementation or the foresight to see technology moving toward streaming, and they did not capitalize on the opportunity. Instead, users of DirectTV had to watch their favorite TV shows and movies when they were being shown, rather than at their leisure.
This drove a lot of users away from satellite TV providers such as DirectTV and to Netflix's flexible option.
GROWING LIBRARY OF CONTENT
Netflix has done a great job over the years licensing the right types of movies and TV shows that resonate with users. If Netflix's library of content were not up to par, there would be no reason for users to move away from providers such as DirectTV.
Since Netflix has made significant commitments, both monetary and otherwise, to the consistent growth of its content library, it has increasingly enticed users away from traditional television and toward Netflix. It's gotten to the point where the company's content library is so robust that there's not much of a reason to keep both a Netflix subscription and a DirectTV subscription.
LOW-COST PROVIDER
At $8 per month as of 2015, Netflix's business model offers users a great service and a great platform at a fraction of the cost of DirectTV. When DirectTV is bundled with Internet, the monthly fee can easily exceed $100. Netflix offers a much lower monthly subscription with no need to bundle any additional services.
This has caused users to cancel their DirectTV subscriptions and pick up the $8 Netflix subscription to reduce costs and receive similar, if not better, benefits.
ORIGINAL PREMIUM CONTENT
Finally, the largest product differentiation that makes Netflix a company that will soon be worth more than DirectTV is the fact that it has focused efforts on creating its own original content.
These Netflix original series are some of the most popular series out there as of 2015, and they have garnered awards and recognition. When the best shows out also happen to be provided by a on-demand service provider that charges a fraction of the cost when compared to other providers such as DirectTV, it's easy to see why consumers are switching to Netflix.
This original content has legitimized Netflix as a leading media provider, and it has made it one of the best performing companies in the world.
Read more: www.investopedia.com/articles/markets/081315/netflix-will-soon-be-worth-more-direct-tv.asp#ixzz3j4CbgbQL
Follow us: @investopedia on Twitter
AAA |
Netflix Inc. (NFLX) is a provider of on-demand Internet streaming media, such as movies and TV shows. For a flat monthly subscription, users of Netflix can access the company's entire library of media, including its original content. The company has completely disrupted the TV industry.
DirectTV, on the other hand, is an American direct broadcast satellite service that broadcasts the type of media that can be watched directly on television. As of July 2015, the company is a subsidiary of AT&T (T).
With both companies offering video media to users across the globe, it's natural that they would start competing if the younger Netflix company ever reached a size large enough to threaten DirectTV. With the meteoric rise of Netflix over the past five years, the company has reached a point where it will be worth more than DirectTV.
Now that DirectTV is a subsidiary of AT&T, however, Netflix is measured on specific drivers that make it more popular with consumers than DirectTV, rather than on market cap.
ON-DEMAND SERVICE PROVIDER
The number one reason why Netflix has found so much success is because it came to the market as the only provider of video media that allowed a user to watch its entire library of streaming media at any time.
Many companies, DirectTV included, either didn't have the technology, the speed of implementation or the foresight to see technology moving toward streaming, and they did not capitalize on the opportunity. Instead, users of DirectTV had to watch their favorite TV shows and movies when they were being shown, rather than at their leisure.
This drove a lot of users away from satellite TV providers such as DirectTV and to Netflix's flexible option.
GROWING LIBRARY OF CONTENT
Netflix has done a great job over the years licensing the right types of movies and TV shows that resonate with users. If Netflix's library of content were not up to par, there would be no reason for users to move away from providers such as DirectTV.
Since Netflix has made significant commitments, both monetary and otherwise, to the consistent growth of its content library, it has increasingly enticed users away from traditional television and toward Netflix. It's gotten to the point where the company's content library is so robust that there's not much of a reason to keep both a Netflix subscription and a DirectTV subscription.
LOW-COST PROVIDER
At $8 per month as of 2015, Netflix's business model offers users a great service and a great platform at a fraction of the cost of DirectTV. When DirectTV is bundled with Internet, the monthly fee can easily exceed $100. Netflix offers a much lower monthly subscription with no need to bundle any additional services.
This has caused users to cancel their DirectTV subscriptions and pick up the $8 Netflix subscription to reduce costs and receive similar, if not better, benefits.
ORIGINAL PREMIUM CONTENT
Finally, the largest product differentiation that makes Netflix a company that will soon be worth more than DirectTV is the fact that it has focused efforts on creating its own original content.
These Netflix original series are some of the most popular series out there as of 2015, and they have garnered awards and recognition. When the best shows out also happen to be provided by a on-demand service provider that charges a fraction of the cost when compared to other providers such as DirectTV, it's easy to see why consumers are switching to Netflix.
This original content has legitimized Netflix as a leading media provider, and it has made it one of the best performing companies in the world.
Read more: www.investopedia.com/articles/markets/081315/netflix-will-soon-be-worth-more-direct-tv.asp#ixzz3j4CbgbQL
Follow us: @investopedia on Twitter
